Best junior investment Isas 2024

What is a junior investment Isa?

A junior investment Isa can be used to buy and hold shares, funds and other types of investment, without incurring tax

Parents and guardians can set up a junior Isa (Jisa) for their kids, provided they're under the age of 18 and live in the UK. You can then invest up to £9,000 each financial year and any growth of the money you put in – whether that's interest or investment returns – will be tax-free. 

Even if you invested the full £9,000, you'd still have the rest of your own £20,000 annual Isa allowance to invest in that financial year in a stocks and shares Isa, cash Isa, lifetime Isas, or innovative finance Isa.

Once you put money in a Junior Isa, it officially belongs to your child and can't be accessed by anyone else. When your child turns 16, they can manage their own account online but they can't access the money until they turn 18 - at which point the junior Isa rolls automatically into an adult Isa.

Why should you get a junior investment Isa?

Investing in a junior investment Isa has three main advantages:

1. Returns are tax-free
2. The money can only be accessed by your child, and not until they're 18
3. Investing could get your child a higher return than cash Isas or savings accounts

The disadvantage is that some or all of the money you're saving for your child could be lost, if investments don't perform well.

You'll also have to pay a small fee to the junior investment Isa provider.

Junior investment Isas vs junior cash Isas

While a cash Isa and investment Isa will offer you the same tax-free benefits, there can be a big difference in the returns you get back.

The best junior cash Isa available in early 2023 paid 4% which then lagged behind inflation, so your money would lose value in real terms.

Investing in a junior investment Isa, on the other hand, gives you a chance to not only match inflation but even outpace it. 

If you invest the money you put aside, you have more control over what the money does For example, you might want to invest in projects aiming to have a positive impact in the world your child will grow up in – which you could do through ethical investing.

Though a child can have both types of junior Isa, you can only open and pay into one type of junior Isa per year.

Support your growing family: Our expert advice can help you make the right choices, from improving your home to planning your finances

Junior investment Isas vs Premium Bonds

The popular choice of premium bonds as a gift for a child - while also tax-free - struggle to match the returns of both cash and investment junior Isas. 

If you invested £500 in the premium bonds for your child when they're born, in most cases they'd win nothing in most years they're invested – just an odd £25 here and there.

Whereas if you put £500 into a junior investment Isa for a newborn, you could end up leaving them nearly double what you put in – more than £970 by the time they can access it, assuming 4% growth of their investments each year. 

• Find out more: Ways to save for your children

Is a junior investment Isa risky?

All investing involves the risk of losing money, though you can manage these risks.

When you open a junior Isa you'll be asked to pick the investments that go inside it. Some investments, such as company shares, are more volatile than others, such as bonds. 

We've got plenty of guides to help you pick investments, and a financial adviser can also help. 

Some providers, such as Moneyfarm, Nutmeg and Wealthify, will pick investment for you based on a questionnaire you fill out.

Given that your money could stay invested for eighteen years if you set an junior Isa up soon after your child is born, you'll be able to hold out through dips in value of your investments and have a better chance at turning a generous profit.

Ultimately, you need to be comfortable with the very real possibility that you'd get no profit at all or even lose the money you invested in the first place. If that doesn't sit right with you, you might be better off with a junior cash Isa.

• Find out more: How to invest: a beginner's guide 

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Can you open a junior Isa for your grandchild?

If you're a grandparent, you can't open a junior Isa for your grandchildren - unless you are the child's legal guardian - but you can make contributions up to the £9,000 annual limit each year. 

The £9,000 limit applies to the total payments made by all people depositing money into the junior Isa, so check with the child's parents how much has been put in already this financial year so your money doesn't bounce back to you. 

The limit is for an individual child so if you have several grandchildren, you would be able to contribute up to this amount for each grandchild each year.

Only the parent or guardian who invested (or the child themselves when they turn 16) can control the investments in the account, so grandparents can't decide where their money goes.

If you're interested in helping children and grandchildren, read our guide to Inheritance tax planning and tax-free gifts.

Where can I find the best junior investment Isa?

You can open a junior investment Isa with an investment platform – a company that allows you to buy investments. 

Here we've listed investment platforms that offer junior Isas, how much they charge and the minimum investment.

Click on the links to read our reviews of the difference platforms, based on feedback from customers, or see our guide to the best investment platforms in the UK for 2024.

Source: Unbiased

• Find out more: Best investment platforms 2024

Can you transfer junior Isas?

You can also transfer between junior Isa providers, as long as the new provider accepts transfers. 

To do this, you’ll need to transfer all your junior Isa investments from previous years.

Don't just shut down the account and move the money yourself, as you'll lose all the tax-free benefits of the savings you've made.

You can find out more about investment Isa transfers here.