Junior Isas and Child Trust Funds are two costly blunders that families must avoid.
FAMILIES are pouring billions of dollars into Junior Isas (JISAs) and Child Trust Funds (CTFs), but they’re making two easy blunders that could cost their children a small fortune when they grow up.
Children could lose billions of pounds if their JISA and CTF monies are left in low-value cash accounts or if their parents lose sight of them. Experts advise parents and grandparents to evaluate their investment portfolios and locate any misplaced funds.
According to new data, children are presently losing almost £3 billion in Junior ISA and Child Trust Fund growth, and these losses are expected to expand over time.
They need need this money to pay for their education, supplement their income, or take the first step up the property ladder.
Experts recommend that parents and grandparents monitor their JISAs and CTFs to ensure that the money is invested correctly, and that those who have lost track of their accounts take the time to locate them.
Almost a million families have invested in JISAs for their children, totaling nearly £1 billion, or £1,000 per child.
Some people pay a lot more, which means their lucky children could inherit significant quantities of money when they turn 18, and it is legally theirs.
JISA funds can be invested in cash or stocks and shares, but investing experts warn that many people leave enormous sums of money in cash, earning almost no interest.
Despite the fact that savings rates have plunged and stock markets have soared since the tax-free savings wrapper was created in 2011, two-thirds of JISA money is stored in cash.
Cash According to estimates from financial management Quilter, JISAs have paid an average of 2% per year since then, while a global spread of equities and shares would have delivered a better 11%.
It is estimated that if JISAs had been invested in shares, children would have £1.2 billion more.
Given today’s record low interest rates, Heather Owen of Quilter’s financial planning firm says cash is no longer king: “Inflation may undermine its worth, and children will miss out on the opportunity to develop their financial prosperity by investing instead.”
Although some parents and grandparents may be hesitant to invest their children’s money in stocks, young people can afford to take bigger risks because they have more time to recover. “Brinkwire News in Condensed Form.”