Published On: Thu, Jul 11th, 2024
Business | 2,689 views

Little-known savings account could pay for your child’s first home and university fees | Personal Finance | Finance


Parents and guardians could provide a huge boost to the savings of their children with a Junior ISA.

Wealth firm True Potential has encouraged families to look at opening an account, as maxing out a Junior ISA each until a child turns 18 could provide them with enough savings to buy a house and cover a three-year university course.

This is based putting the maximum £9,000 a year into a stocks and shares ISA with a standard six percent growth, which would provide £278,150.87 by the time the child turned 18.

The average first-time house is currently £249,000 while a three-year university course is £9,250 a year.

Neil Rayner, head of Advice at True Potential, said: “Starting early and establishing a routine of saving regularly, even in small amounts, can significantly benefit your child’s long-term financial health.

“It’s important to set realistic goals—whether it’s helping them through university, buying their first car, or contributing to a house deposit. Our research shows that with wise investments, these goals are well within reach.”

Even parents who can only afford modest savings deposits could get good savings over time, with an investment of £50 a month growing to £19,000 by the time the child turns 18.

Despite the benefits of a Junior ISA, many people do not know about the account. Research from the group found only 27 percent of people have good knowledge of how ISAs work.

Parents and guardians control the Junior ISA until the child turns 18 and then the funds are transferred to them.

Other family members and friends can contribute into the pot to build up savings for the child.

ISA savings have the benefit that they are entirely tax-free, with no tax to pay on any interest or investment growth, or on any income derived from an ISA.

For the latest personal finance news, follow us on Twitter at @ExpressMoney_.



Source link