You are here: Home - Investing - Getting Started - News -

Take more risk with your kids’ savings, parents urged

Written by:
More than 70 per cent of Junior ISA money is languishing in cash accounts offering poor returns, figures from Hargreaves Lansdown reveal.

Of the £582m deposited into Junior ISAs overall in the 2014/2015 tax year, £405m was put into cash ISAs, according to the UK’s biggest fund platform.

It said 365,000 cash ISAs were opened during this period compared to 145,000 stocks and shares ISAs.

Hargreaves Lansdown said parents can achieve better longer term returns by investing in the stockmarket.

“For the majority of Junior ISA investors, cash is simply the wrong choice and parents and grandparents should be looking to a stocks and shares Junior ISA to improve the potential returns,” said Danny Cox, head of advice at the firm.

“Investing for new-born children or grandchildren is the most popular time, with nearly 30 per cent of HL Junior ISAs being set up before the child reaches their first birthday. Sensibly these parents and grandparents are recognising over the longer term a stocks and shares Junior ISA is likely to provide a much better return than a cash Junior ISA.”

Andrew Hagger, director of, said the findings were “unsurprising.”

“Stocks & shares have, historically, always outperformed cash so if you’re looking to invest money for longer than five years, a cash ISA isn’t the best bet,” he said.

“The only thing to bear in mind is that it’ll be quite a bumpy ride, given market volatility.”

Hagger believes the traditional risk exposure principles that apply to pensions also apply to Junior ISAs. As a young person approaches the age at which they access their ISA, their ISA holdings should increasingly transition towards less risky holdings. The older a child is, the less time they have to recover.

“You wouldn’t want the market to crash six months before your child was due to receive their money, so start moving their ISA into safer stocks or cash a year prior to maturation,” he said.

Children can open a cash as well as a stocks and shares Junior ISA account, but can only hold one of each type at any one time.

They can also invest £15,240 into an adult cash ISA from age 16.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

How to get 5% interest without tying up your savings for years

You don't have to lock your money away to get an above-average return on your savings.
How to get 5% interest without tying up your savings for years

First Direct doubles Regular Saver interest rate to 7%

Starting Thursday 1 December, First Direct is joining those raising the rates on customers' savings, doubling...
First Direct doubles Regular Saver interest rate to 7%

Get £175 for switching to Halifax…but there’s a catch

Halifax said the payment for people who switch accounts starting tomorrow would be its largest such offer ever...
Get £175 for switching to Halifax...but there's a catch

Ryanair jetting towards US flights for £10

Ryanair is on course to achieve its long-held ambition of offering transatlantic flights to the US – and the...

Investing in car parks: a good vehicle for income seekers?

As the search for income continues, many investors are turning to alternatives, with car parks becoming increa...

A quick guide to guarantor loans – in association with Guarantor Loan Comparison

Considering a guarantor loan or becoming a guarantor yourself? Read our essential guide...

Results round-up: Companies to watch this week

Mulberry and more will face the music this week.

Product launches of the week

Select Property Group, Schroders, Leeds Building Society and more have exciting news this week.

Money Tips of the Week