Moving my children’s savings into a JISA was never motivated by Jeremy Hunt’s tax agenda – the switch was made in 2020 after returning from a stint working overseas. During their early years, their mini savings pots were left languishing in high street bank accounts with minimal returns as expats cannot take advantage of the tax-free benefits of holding investments within an ISA.
While some of their money is invested in a global passive index tracker made up of large, mid-sized and small company shares in developed and emerging markets, the rest is held in a traditional 80-20 fund split between shares and bonds. It’s a no-frills, hands-off approach designed to add a little bit of risk to their portfolio because of their young age, as they have a longer time frame to absorb any short-term volatility.
Crunch the numbers and a parent maximising their child’s investment JISA from birth could set their offspring on the path to become an ISA millionaire by the age of 39. That’s based on an annual investment of £9,000 until the child turns 18, a conservative annual growth rate of 6 per cent without factoring in platform costs, and the child not touching the money and leaving the money invested after the age of 18.
Alternatively, they may choose to roll the entire amount into an adult ISA or recycle £4,000 each year into a Lifetime ISA – another tax-free option that allows younger savers to stash up to £4,000 per annum for a deposit on a first home or for their retirement after the age of 60 and benefit from a 25 per cent Government cash bonus of up to £1,000 on their contributions.