‘Doing surprisingly well!”: Mum switches her children’s trust funds’ to Junior ISAs
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This week marked the tenth anniversary since the initial launch of Junior ISAs (JISA) in the UK. A junior ISA assists parents in saving for their children without having to dip into their own £20,000 ISA allowance. Kay Johnson is one of the many parents who have opted to transfer money from her sons’ existing child trust funds to Junior ISAs in a bid to teach her children about the value of money.
As a teacher, both Ms Johnson and her husband have gone out their way to educate their sons on how the world of money works and how they can save for the future.
She said: “We’ve always been quite open with the boys on money and how much things cost, I think it’s useful training for when they have to manage their own finances.
“So, they’re really good at looking for bargains and will seek out buy-one-get-one-free offers when we’re out shopping or will find the cheapest way to buy their favourite fizzy drink.
“It’s all about learning that you can’t always have everything you want right now; that you have to save.
“It’s good that they’re so financially aware, because it’s not going to be easy when they are older, so they need all these skills to help them.”
In regards to switching to JISAs, Ms Johnson believes the benefits of choosing a stocks and shares account were crucial in teaching her sons how to invest properly.
After having two child trust funds for her sons, Ethan and Joel, she decided to go to One Family to open a stock and shares Junior ISA for her boys.
Ms Johnson added: “The boys’ junior ISA accounts have currently around £1,000 in each, I chose stocks and shares over cash accounts because I thought there was a better chance that they would grow.
“They’ve done surprisingly well, despite the drop in the stock market last year, but I hoped it would pick up again and it did.
“We’re already talking to Ethan about what to do next with his money, and we’re giving him some guidance.
“I’d like him to reinvest it so that he can save towards getting onto the housing ladder.
“There are lots of investment options available, so it is quite a minefield, but I’ll encourage him to put it away wisely and not dip into it.”
The importance of saving and investing has long been recognised by Ms Johnson and she believes One Family’s Junior ISA products have been useful in passing on that lesson to her sons.
She added: “I’ve been knowledgeable about savings from a young age as my parents encouraged it.
“I saved £1000 from part time work over a few years whilst I was at school to buy a car in 1987.
“The pandemic has encouraged me to save even more as it has taught me that you never know what may happen so financial security is key.”
On the benefits of JISAs,Nici Audhlam-Gardiner, Chief Commercial Officer of OneFamily said, “Smaller savers have traditionally put money into cash accounts and relied on interest to build value. But in most cases a JISA is for long-term saving – the majority are taken out within the first year of a child’s life, so they are entirely appropriate for investment.
“With the current low rates on cash accounts and rising inflation the risk is that these JISAs could have their value nibbled away over time – it’s a bit like keeping savings under a moth-infested mattress.
“However, a stocks and shares JISA enables financial inclusion, by allowing smaller savers to benefit from the gains of the stock market, with a minimum investment of £10 per month. So, £1,000 invested ten years ago in a OneFamily stocks and shares based JISA* would have nearly doubled in value with a growth of 87.99% taking it to £1,880 – despite the market falls of 2020.”
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