Are you looking to save for your Grandchildren’s future?

North Devon Gazette

Here at Town and Country Financial Advisers, we are here to assist with every aspect of Financial Advice, including looking to help you save for younger family members.Â

Junior Individual Savings Accounts are, long term, tax-free savings accounts for children and in the current tax year (2021-2022) the savings limit for Junior ISAs is £9,000. The child’s legal guardian will need to open the ISA account; however, Grandparents are able to contribute into the ISA up to the annual limit.Â

New calculations from Quilter Financial Planning, reveal that if £3,600 was put into a Stocks and Shares Junior ISA when the product was first made available in 2011 it would currently be worth nearly £10,000 compared to just £4,000 had the money had been invested in premium bonds during the same period.Â

Premium bonds have risen in popularity over the past year with a record £23.8bn being invested into NS&I savings products, such as premium bonds, in the wake of the pandemic. While premium bonds are 100% backed by HM Treasury, they now offer an average of 1% annual prize fund rate with the chance of earning nothing unless a prize draw is won.Â

The maximum JISA subscription limit in 2011 was £3,600 and calculations show that if the full amount was put into a stocks and shares JISA and invested in the IA UK All Company index it would be worth £6,918 today and if invested in the IA Global index worth £9,580 over the 10 years assuming charges of 0.5%.Â

Meanwhile, the same amount invested in premium bonds over the same period would be worth just £4,025 assuming no large cash prize was won and using the historical prize fund rates which give an average return of 1.25%.Â

Junior ISAs have also risen in popularity with account subscriptions recently surpassing the one million mark for the first time since the accounts were launched in 2011. Lifetime gifting can be a good way to not only help your grandchild save for adulthood, it is also an excellent way of mitigating any inheritance tax concerns. With interest rates at historic lows, if you are looking to put money away for a child to enjoy when they grow up, investing can be a way to maximise your gift.Â

If you would like any further information, please do not hesitate to call our friendly team of Advisers here at Town & Country on 01271 458121, we look forward to hearing from you.