Published On: Mon, May 13th, 2024
Business | 2,092 views

Exact ISA that has surged in popularity – with savings now at an all-time high | Personal Finance | Finance


The number of Junior ISA accounts is surging as parents look for ways to secure the financial future of their children.

At the same time the amount of money in these tax free accounts is running at an all-time high, according to a new analysis.

The Junior ISA (JISA) allows youngsters to access the cash or investment once they reach 18, which could prove vital to help fund their university education, a gap year or, perhaps, buy a car.

Alternatively, it could provide a safety net to protect them against future financial shocks as they enter the world of work.

Analysis by peer-to-peer real estate investment platform, easyMoney looked at ISA savings data between the financial years of 2011/12 through to 2021/22 – the latest available data.
It looked at how the number of Junior ISAs, formerly known as Child Trust Funds (CTFs), and the amount of money being saved within them, has changed over time.

CTFs were scrapped in 2011 as a result of the austerity measures which followed the global financial crisis. Instead parents were offered Junior ISAs as a way to save money for their children’s future.

The Junior ISA offers tax-free savings for children under the age of 18, with the 2024-25 annual allowance coming to £9,000.
A Junior ISA can take the form of a cash ISA or a stocks and shares ISA, and must be opened by a parent or legal guardian.
Once in the ISA, the money belongs entirely to the child who can take personal control of the account from the age of 16, but cannot withdraw any funds until they turn 18.
Provisional data for 2021/22 shows there were 1,212 Junior ISA subscriptions in the UK. This was up by 26.9 percent on the year before in a rise which coincided with the moment that the Bank of England started to raise interest rates.
The increase was largely driven by stocks and shares ISA subscriptions which increased by 65.5 percent on the year, while the amount held in cash ISAs increased by just 10.3 percent.

The latest subscription figures also mark a massive ten-year increase of 1,607 percent since the Junior ISA was first introduced in 2011/12.

The analysis by easyMoney shows that the amount of money being put into Junior ISAs has increased significantly to £1.5 billion – up 20.3 percent on the year before.

The chief executive of easyMoney, Jason Ferrando, said: “When we feel uncertain about the strength and security of our personal financial situation, it’s common to look towards the future and think, how can I make use of the money I have today to ensure I am comfortable in the future.

“The same applies to our children – we are keen to do what we can to make sure they have some savings to use or build on once they enter adulthood.

“Add this to the fact that interest rates have been rising and it’s clear to see why more and more parents have been putting money into Junior ISAs.

“However, in the modern world, children don’t only need financial assistance from parents when they’re young, with many parents choosing or needing to continue supporting their clan well into adulthood, especially when it comes to things like purchasing a home.

“So if your kids are already over 18 and therefore ineligible for a Junior ISA, there are other ISA avenues that you can explore.

Innovative Finance ISAs are a great option because they offer strong rates of return and sidestep the traditional financial institutes that are so vulnerable to the economic shocks and uncertainty that have become commonplace in our modern world.”



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