Are you struggling to pick the right junior ISA? Ben Pollard from SmarterInvestment offers parents a helping hand when planning for your child’s future.
It’s 4 April and the little ones are asleep by 7pm. You’re curled up on the sofa with a nice glass of Sauvignon and Gogglebox has just started. Then it hits you.
“Aaargh… the children’s ISAs! I forgot to set them up. Today’s the last day! Where’s the iPad? Oh… it’s Steph and Dom. I like them. I’ll just see what they think of MasterChef.”
We’ve all been there. There’s always something more important to do first.
But why do we subject ourselves to this annual torment? Simply put, children are priceless, and we all want to give them the best start in life.
Most people have an idea in their heads of what this means, perhaps: baby stuff (£3,000), nursery (£230 a week), possible school fees (£4,000 a term), university (£10,000 a year), first car (£5,000) and finally, the big one: help with house deposit (£25,000).
The scary bit is that this list adds up to a staggering £250,000. And that’s not even counting food and clothes.
So you drag your eyes away from Gogglebox, pick up the iPad and grit your teeth to sort out some ISAs.
As managing partner of SmarterInvestment I know that picking the right investment for your child can be worth an extra £60,000. That’s the difference between the best and worst investment in our comparison tables if you paid in £300 a month for 18 years. It’s astonishing, isn’t it?
As an actuary, I used to help big financial services companies look after their money. SmarterInvestment is using exactly the same techniques to help people compare, buy and keep an eye on their investments. Our website sets out to make buying an investment as easy as deciding which TV to buy on Amazon.
Our aim is to make investing that little bit easier, just go online to compare thousands of investments from over 90 top providers at SmarterInvestment.
How to choose the right Junior ISA
1. When to invest
You can invest up to £4,000 in a Junior ISA each tax year. So you’ve got until midnight on the 5 April before this year’s allowance is lost.
2. Decide how much risk you’re comfortable with
Currently, the best very high risk Junior ISA in our comparison tables is most likely to return 7.77% per annum over 18 years. This compares to just 3.75% for the best low-risk option, or even less in a cash ISA. More risk usually means higher returns in the long term, but more chance of loss in the short term. Junior ISAs are usually held for around 18 years, so it usually makes sense to take some risk.
3. Choose how much to invest
A regular direct debit is a popular way to pay into a Junior ISA and the limit allows just over £300 a month to be invested.
4. Select a Junior ISA
You should aim to keep charges as low as possible and to ‘diversify’ your Junior ISA over a few different uncorrelated funds. We’ve got some very clever algorithms, which analyse thousands of different funds to find the best combinations available. The results are shown in our comparison tables, so it’s really easy to choose a low cost, diversified investment.
5. Keep an eye on it
Financial advisors usually recommend reviewing investments at least once a year to check they are still on track to hit their goals. All Junior ISAs bought via us come with our SmarterCare monitoring service. This is a free service which keeps an eye on your Junior ISA and alerts you if, for example, it falls off track to hit the target you’ve specified, or if there are alternatives available with higher projected returns.