Saturday, 8 June 2019

What is a junior ISA and how do I get one?

I hate jargon. I mean I really, really hate jargon. It makes my blood boil. 

Unfortunately, in the world of money and finance, it’s as common as a Gap sale (does anyone ever pay full price for anything in that shop anymore?!)

One of my biggest bugbears is the term ISA, a phrase you’ve probably heard bandied about.

If you’ve ever looked into saving for your kids, you might have come across a junior ISA or JISA (don’t even get me started!!).

ISAs and junior ISAs are often hyped as the must-have financial product.  But the truth is, a lot of people don’t have a clue what they are so don’t have one for themselves or their kids – which means missing out on some pretty handy perks.

So, here’s a very basic explanation.

An ISA, which stands for individual savings account, is simply an account for your savings or investments where, whatever interest or income you earn, you won’t pay any tax on it.

A junior ISA is EXACTLY the same thing, but for your kids’ savings or investments.

And that’s it.

Sort of.

There are two main types of ISA – a cash ISA and a stocks and shares ISA (the money world loves a bit of jargon).

A cash ISA (or a cash junior ISA) is a savings account you can open at any bank or building society, which pays interest tax-free. There are a range of cash ISAs from easy access to fixed-term products.

A stocks and shares ISA (or stocks and shares junior ISA) is for investing. You can invest in funds, bonds or company shares.

You can open one on an online platform (companies that offer a range of providers - some of the big websites are Hargreaves Lansdown, AJ Bell, Fidelity and Interactive Investor) or directly with a fund management company.

You can only put a certain amount into an ISA each tax year (which in the UK runs from 6 April to the following 5 April).

The current limits are:

ISA - £20,000

Junior ISA – £4,368

ISAs and junior ISAs are really flexible – you can put the whole lot in either a cash ISA or a stocks and shares ISA, or you can split it between both. It’s totally up to you.


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