BEN WILKINSON: Why aren’t more parents taking advantage of the tax-free gains available with Junior Isas?
We all want what is best for our children. So why do so few of us take advantage of the superior tax-free gains available on the stock market with Junior Isas?
Of course, the stock market can take a beating — as we have seen so dramatically this year — but history has told us time and again that it (eventually) always comes out on top.
Our story today shows that saving the same amount into a stocks and shares Jisa versus an ordinary cash account can yield a third more.
The stock market can take a beating – like we have seen again this year — but history has told us time and time again that it (eventually) always comes out on top
While the stock market can be risky for those who need their money to hand or rely on it for income, it is much more resilient over the 18 years parents typically save for their children.
Yet it was only after working on this story that I was finally driven to open a stocks and shares Jisa for my two-year-old son.
His first account was a child savings account with Nationwide that paid a reasonable 3.5 per cent, but when that was slashed to 1 per cent this year I knew I had to move the money.
I bought Premium Bonds, which pay prizes at a rate equivalent to 1.4 per cent and have that chance of winning £1 million every month.
But I know these interest rate rewards are inferior to what can be gained with stocks and shares.
I had previously begun the process of opening a stocks Jisa, but always abandoned it when it came to pick the funds.
None of the names meant anything to me, and I was not prepared to bet my son’s savings on any of them.
Charges are also a hurdle for parents. You are told they exist, but there’s no tangible information readily available about what they’ll really cost you.
I finally picked a provider whose fund listings gave me some idea of risk and roughly what I would be investing in.
The industry needs to make it easier for parents to take that jump into investing, or else a generation will miss out.
The rewards the stock market offers should not be reserved for those who have a good grasp of how to invest.
Many parents will never want to take any risks with their child’s savings. But interest rates are so low that money in cash accounts is being gobbled up by inflation.
And it could be argued that leaving your child’s savings to the mercy of interest rates over 18 years is a greater risk than investing on the stock market.
But for now, I’ve spread the risk and am saving half into Premium Bonds and half into the investment Jisa. We’ll see which one comes out on top.
Our report shows that there are hundreds of pounds to be saved if you turn your back on petrol and get behind the wheel of an electric vehicle.
Yet the real challenge is to convince motorists that now really is the time to buy one.
Many fear running out of power on a long journey, having to queue at a service station to charge their car, and then waiting longer while it recharges.
What’s clear, from the Government’s multi-million pound investment, is that electric cars are not going away and one day we will probably all be driving one.
Perhaps we need a few more incentives. If the Government did go ahead and offer a generous scrappage scheme, that might just be enough.
Britain’s car industry will certainly need the work.
Don’t pack yet!
Finally, there is some sunshine at the end of the tunnel, with news that Britons can soon go abroad for their summer holidays. But as we reveal, it won’t be plain sailing.
The biggest threat to your trip will, of course, be coronavirus, and while the pandemic is still not under control, insurers are unlikely to cover you for all eventualities.
So heed our experts’ advice before booking, and wait until travel to your chosen destination has been approved by the Government and you can get the insurance you need.
A well-earned break may well be possible, but it could still easily be snatched away until this awful virus has been defeated.
- Victoria Bischoff is away