A Junior Savings Account, or JISA, is an amazing way for any UK parent to let their kids enjoy the benefits tax-free savings. JISAs work pretty much like their adult sibling, the ISA, or Individual Savings Account. Money that’s invested grows, and the government never, ever taxes that growth. It’s an absolutely indispensable tool for those hoping to build a little cushion for their offspring.
How you invest your child’s JISA in is pretty much up to you. ISAs can be invested in stocks, bonds, and just about all banks offer so-called “cash” JISAs, which earn a fixed annual interest rate. Those willing to take a little more risk in hopes of a lot more growth can invest in the kind of low-fee ETFs that Wealthsimple specializes in.
A parent can open a JISA for a kid as small as a newborn; 16 year-olds are free to open their own JISAs. As soon as your kid turns 18, she’ll graduate to ISAs. There’s a notable difference between the two accounts. JISA’s maximum annual deposit is considerably lower than that of an ISA — £4,128, compared to ISA’s £20,000.
There are a couple important thing to remember about JISAs: Though JISA funds can be invested in various different ways within one institution, you can’t open JISAs at more than one bank or investment firm per year. And while parents and guardians open and manage JISAs, the money belongs to the kid, and can only be accessed when the child turns 18.
Hopefully, she’ll let it continue to grow, or spend it on something practical — like schoolbooks or a dependable used car — but it will be entirely up to her to decide.