Hundreds of children have six-figure sums in junior individual savings accounts (Jisa) thanks to their parents’ investments in stocks and shares, HM Revenue & Customs figures have revealed.
The data, obtained by Standard Life, shows that as many as 400 children are on course to receive at least £100,000 upon gaining ownership of their Jisa on their 18th birthday, while 2,400 have pots that are worth between £75,000 and £99,000.
No more than £9,000 can be paid into a Jisa each financial year, with all interest and investment returns free of tax.
So the most that could have been put in over the past 18 years is £85,636 – using the previous pre-2020 limit and the Child Trust Fund limit from before Jisas started in 2011.
But investing that in a stocks and shares Jisa – rather than a cash Jisa – has seen accounts soar into six figures.
According to research by trade body the Investment Association, parents are twice as likely to open a cash Jisa over a stocks and shares one, where the returns are likely to be less generous.
In safe hands: Hundreds of children have six-figure sums in junior individual savings accounts (Jisa) thanks to their parents’ investments in stocks and shares
A lack of understanding is one reason why they hesitate to take the leap – more than three in five parents choose a cash Jisa as they think it is easier to understand.
This means children could lose out on thousands of pounds for university fees or a house deposit.
But not Rupal Vasani. The chartered accountant, 42, opened a stocks and shares Jisa with investment manager Nutmeg for her seven-year-old daughter three years ago.
Rupal and her husband wanted to support her future after paying off their Leicestershire home’s mortgage. ‘We invest in stocks and shares ourselves so we have lots of knowledge on that. My daughter is only young so we’re doing this for the long term.
‘Other mothers love the spa but I love investing.’
With £200 going into the Jisa monthly, Rupal hopes her daughter uses it for education, but has also started saving into a junior self-invested personal pension (Sipp) with Hargreaves Lansdown for her retirement. Parents or guardians can open a Jisa for a child, who can then access it at 18.
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