The average age of a first-time home buyer is now 33, and the average deposit they need is £34,0001. University students will graduate with an average debt of £44,0002. Today’s children are growing up in a very different and challenging financial world. But with foresight and planning, parents, grandparents and the wider family can take steps that will give younger generations a crucial head start, and could help foster the savings habit.
A Junior ISA is one of the most -tax-efficient and flexible ways to build a fund for a child’s future. In this tax year you can invest up to £4,080 for each child, either through a lump sum or regular savings. The investment is locked in until the child is 18, at which point it is rolled over into a standard ISA. The allowance will increase to £4,128 from April 2017.
Child Trust Funds (CTF) were available to children born between September 2002 and January 2011. It is possible to transfer a CTF into a Junior ISA, which typically have a wider investment choice and more control over the distribution of funds when the child reaches 18.
The value of a Junior ISA with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than was invested. An investment in a Stocks & Shares Junior ISA will not provide the same security of capital associated with a Cash Junior ISA. The favourable tax treatment of Junior ISAs may not be maintained in the future and is subject to changes in legislation.
1 Halifax, July 2016
2 Sutton Trust, April 2016