2 minutes reading time (427 words)

Should you switch your kids’ Junior Isas?

children playingI have been neglecting my son’s Junior Isa. Not having the spare cash to put anything in at the moment is one reason. The other is that half of it is invested in the Neil Woodford fund Jane wrote about last month – see here - so it’s not performing well.

Anyway, there isn’t much money in it – less than £5,000 I think. I chose to put it in investments rather than cash because I do think that strategy works over the longer term. But then, you can lose money as our experience shows. Added to that, the boy is 13 this weekend. So he could access the Jisa in just three years (and withdraw the cash in five). That’s not a lot of time for the investment to grow in.

So I’m thinking of transferring it over to the National Savings & Investments cash Jisa. It has just put the rate up from 2.5% to 3.25% which makes it the best no-strings rate on offer, bar the Coventry Building Society which offers 3.6%. Santander also pays 3.25% but only if the parent has a 123 or Select account (I don’t).

What’s more, NS&I seem to take transfers in from other providers’ Isas including from investment ones. I haven’t started the transfer yet but as the form seems to assume a cash Jisa is being transferred, I think it might not be that straightforward.....But anyway, enough about our Jisa problems. If your children have cash Jisas, it’s a good idea to check what interest rate you are getting on them. Some cash Jisas aren’t paying enough to keep pace with inflation.

And if you do want to save cash for your children, there’s an alternative which trumps all Jisas. The Halifax Kids’ Monthly Saver pays a fixed rate of 4.5% if you save between £10-100 a month for your child. It is not the kind of account kids have themselves but one for parents wanting to save for them. The only thing to watch out for here is that after a year the money is moved into another Halifax account which pays 2% variable on balances below £5,000 and just 0.2% on anything over this limit. Keep a note of when the year is up and move the money after then to a better deal.

Do watch our video on saving and investing for children here. And if you want to find the best current deals, check out the comparison sites such as uSwitch*, Moneysupermarket*, comparethemarket* and confused.com.

And see our guides to saving and investment.

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Saturday, 23 March 2019