Aviva: How to save your children’s money

Aviva wanted an article to highlight how saving money for children in a Junior ISA can be the gift that keeps on giving. The target audience is new parents who aren’t too savvy when it comes to investing. Read some of the article below, or check out the whole thing here.

My two-year-old has more money than me. It’s mainly thanks to generous grandparents who love any excuse to spoil her and her sister. 

My husband and I, while not as flush with cash as our baby-boomer parents, are still mildly terrified that things like buying a home will be unobtainable for our children, so we put a bit away every month for them too.

Our family is not unique. Whether it’s gifts for birthdays and Christmas or regular payments to build a pot of savings for the future, parents, grandparents, aunties and uncles are boosting bank accounts belonging to the children of the family. 

But, how can we make the most of this generosity and try to make our kids’ cash work as hard as possible?

Putting the money in a Junior ISA (or JISA) is one way to get that money growing. Under 18s are entitled to £4,368 of tax-free savings each year, after all, and a JISA is a tax-efficient savings account just for children, which can’t be touched until the child turns 18.

There are lots of JISAs on the market, so what factors should you look at when you’re choosing one? 

What to think about when you’re opening a Junior ISA

Money growth 

Like normal ISAs, there are two types of JISAs: a Junior Cash ISA, which offers a variable rate of interest, and a Junior Stocks and Shares ISA, where the potential growth is based on the performance of whatever stocks and shares your money is invested in. 

A Cash ISA is generally considered a safer option since your money is guaranteed to grow as long as the interest rate is above 0%. A Stocks and Shares ISA, meanwhile, has the potential to provide a greater return, but can also fall in value.

But remember that the value of your investments can fall as well as rise and you could get back less than you invested.