Watch your children’s savings grow: Junior Isas are now more generous

Former Tory MP turned Lib Dem peer John Lee, Baron Lee of Trafford

By Liberal Democrat peer Lord John Lee of Trafford,  

I have always been a saver. I remember, as a boy, crossing the road from our home/surgery – my father was a doctor – to buy savings stamps, endeavouring to fill a book.

At age 16 I bought my first shares – £45 worth of ship owner Aviation & Shipping — a company which owned one vessel.

Sadly the ship went down, taking my investment with it! Not the most auspicious start to my investing, but thankfully my selections got better over the years that followed.

Indeed, in 2003 I was judged to be the first Isa millionaire, having taken mine out in 1987 when, as Peps, they were introduced by the then Conservative government.

I put the maximum one could invest yearly into my Pep/Isa, so by 2003 I had put in £126,000, re-invested the dividends, and so built a £1million Isa portfolio.

I have spent the whole time I have been investing – more than 60 years – trying, through hundreds of articles etc, to encourage others to become private investors and have the confidence to make their own decisions.

When my two daughters were small, three and five years of age, I invested a small inheritance they received in an investment portfolio for each of them. You can’t start too young!

In those days, in the early 1980s, we had nothing like Junior Isas to invest in. Since then, successive governments have tried to encourage young people to save and invest, with varying degrees of success.

In the early 2000s, the then Labour government launched Child Trust Funds, giving every baby born in the UK between September 2002 and January 2011 at least £250 in vouchers to start one of the funds. Lower-income families received £500.

These funds had to be held for 18 years, and from last September hundreds of thousands of teenagers have been able to access theirs.

While some will obviously encash theirs immediately, others hopefully will continue with adult Isas or start their own portfolios with them.

I see no reason why the principle of Child Trust Funds couldn’t be resurrected – giving all newborns a small amount to encourage saving, and perhaps direct into a Junior Isa which could then be added to by parents/grandparents, building up a worthwhile nest egg for young people.

While I welcomed the increase of the annual Jisa (Junior Isa) allowance to £9,000 last year, I would have been happier to see a positive move to try to encourage more new investors, rather than helping existing ones.

Parallel to this, we really do need to do much more to try to educate young people about the world of budgeting, saving, investing etc.

Sadly, so little in this area is taught in schools, and young people are leaving school in near-complete ignorance of financial matters. I would like these subjects to be compulsory – surely this would be in our national interest?

Thankfully, there is some movement in this direction. The Government has introduced T-Levels for 16 to 19-year-olds to aid them in their chosen technical and vocational careers.

The plan is for a Financial T-Level to be rolled out in 2022, which takes in budgeting and saving.

I have tried to make a modest contribution by publishing a short, easy-to-read introduction to the world of stock market investing by writing Yummi Yoghurt – A First Taste Of Stock Market Investment.

I believe it is the first book of its type focused on teenagers, although it could apply equally to absolute novices.