Have you ever thought about investing in your children?
You probably have and if you’re considering doing it, you are undoubtedly gathering all of the necessary information. That’s exactly what you should do! You want to conduct some research and be prepared before investing your money.
Previous research is crucial and may make all the difference. Purchasing stocks and building a portfolio is a difficult process since you are essentially purchasing assets. Having some reasonable returns on investments might take a lot of time.
It can’t be something you achieve in a split second and you have always to keep in mind that all investments come with risk and you might see your money grow as well as go down.
When it comes to investing money for your sons and daughters, there are specific types of saving accounts that let you do that. Among all, you may want to consider Stocks & Shares Junior ISA.
What are stocks and shares junior ISA?
For youngsters under the age of 18, a Junior ISA is a savings and investing account not subjected to taxation. Parents or legal guardians are the ones entitled to open a Junior ISA. This account lets you save up to a limited amount of money, called ‘annual allowance’ and it is £9,000 for the current tax year (2021-2022).
The money allocated in the account is only accessible when the kid reaches the age of 18. Stocks and shares Junior ISA is a specific type of account that operates with stocks, mutual funds, bonds, investment trusts, and much more.
If you decide to open this you won’t be able to just save money, but at the same time, it allows you to invest it in a tax-advantaged way.
Stocks and shares Junior ISA are designed for investors with a higher risk profile, for those who are not afraid of the markets being volatile. This specific kind of account may pay off over time and considerably increase the value of your assets, even if it carries risks.
Why should you invest in a Stocks & Shares Junior ISA?
Even if stocks and shares may appear to be riskier than cash, they usually have a higher return since you are investing for the long term. If you consider starting saving money for the future of your children since they’re little, you will probably set aside a reasonable amount of money to invest for them.
Then, if you decide to open stocks & shares Junior ISA (also called ‘JISA’) as soon as your daughter or son turns 18, they will get access to the money allocated in the account you opened for them.
This might really help them to start their life as adults, either by paying university fees or by having the deposit for their first home.
Fees for a Stocks & Shares Junior ISA
As stated before, the returns of stocks and shares Junior ISA are not subjected to taxation. Nevertheless, there are other costs and fees applied to this savings account. The most common you should take into consideration are:
- Platform fees – these are also indicated as custody charges, service costs, or yearly fees and are often calculated as a percentage of the sum stored with the platform you have selected to open the stocks and shares junior ISA.
- Dealing charges – these costs are related to the transactions you might make and the share trades. Depending on the provider, these might be applied or not and be more or less expensive
- Transfers – these would take place in case you decide to switch platforms or providers.