Parents or guardians can open the Junior ISA and manage the account, but the money belongs to the child and the investment is locked away until the child reaches 18 years old. Please note that Fidelity does not allow for CTF transfers into a Junior ISA. If your child holds a CTF they can transfer the investment into a Junior ISA. If your child was born between 1 September 2002 and 2 January 2011 the Government would have automatically opened a CTF on your child’s behalf. It is not possible to hold both a Junior ISA and a Child Trust Fund (CTF). A Junior ISA is only available to children under the age of 18 who are resident in the UK.
Withdrawals will not be possible until the child reaches age 18. Junior ISAs are long term tax-efficient savings accounts for children. Tax treatment depends on individual circumstances and all tax rules may change in the future. Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Fidelity also covers exit fees up to £500 per person (T&Cs apply) and doesn’t charge service fees on Junior ISAs - although ongoing fund charges and other fees may apply. If you’re interested, you can find out more about transferring a Junior ISA to Fidelity here. So, we transferred our cash junior ISA to a Stocks and Shares ISA. But on balance, we decided that a stocks and shares junior ISA suited our needs more. Naturally only you can decide which type of Junior ISA is best for you, your child and your circumstances. Of course, your investments could fall in value too, which is why you should always weigh up the risks. This growth multiplies over time as your investments will benefit from both your initial principal and accumulated earnings). And as the money you invest for your child is locked in until they turn 18, if you set an account up from birth you’ve got 18 years to benefit from something called compounding (which is where any earnings from your investments - either from capital gains or interest - are reinvested to generate additional earnings over time. With a stocks and shares ISA, the idea is that you’re giving your investments the chance to grow. In other words, you’ll be losing money in terms of real purchasing power. If inflation remains at today’s rate of 10.1% for that same period (which may be optimistic with Citi predicting it’s going to increase to 18% by January 2023), the value of your cash will effectively go down by 6.6%. Let’s say you’ve invested in a cash junior ISA and it offers you a fixed interest rate of 3.5% for a year, as some providers are offering right now 2. But what exactly is the difference between a cash junior ISA and a stocks and shares junior ISA in real terms? And does ‘safe’ come at a cost? It suggests that families prefer to play it safe when it comes to their children’s futures. It also revealed that a staggering 70% of these junior ISAs were invested in cash. The HMRC reported in June that junior ISA contributions topped £1bn a year 1, with an average of £1,133 being paid into some 950,000 junior ISA accounts annually. We found ourselves questioning if this was right for us now that the baby brain mist had lifted. Years later we stumbled across the paperwork and realised that our payments were being made into a cash junior ISA (as the provider had changed after the Child Trust Fund scheme had closed in 2011).
We set up a regular payment plan and promptly forgot about it in a fog of sleepless nights, nappy changes and house moves. DAYS after my eldest was born, I vaguely recall filling in some paperwork for a Child Trust Fund (which was a long-term tax-free savings initiative created by the Labour government in 2005).
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