Junior investment ISAs mark new era for savers

The availability of Junior Investment ISA products has been heralded as marking a new era for savers. According to a report in the Financial Times, these offerings are easier to open than Child Trust Funds (CTFs) and provide greater choice.

These ISAs can be opened without people having to use a government voucher or a birth certificate, and without them having to go through anti-money laundering checks. Also, this form of wealth management can hold any number of thousands of funds, the publication noted.

Commenting on the development, Patrick Connolly from AWD Chase de Vere said: “There is a fundamental difference between the investment options available for CTFs and those which will be available for Junior ISAs.

“The investment industry hasn’t actively engaged with CTFs – meaning that those investing are faced with a very limited choice of, on the whole, fairly mediocre investment funds.”

In contrast, he continued, Junior Investment ISA products should become available “on the major platforms”, providing people with a variety of funds from which to make their selections.

Also commenting on the new provisions, head of research at Rowan Dartington Tim Cockerill remarked: “There has always been a tendency to play it safe with children’s investments but they are the ideal investors because they have time on their side.”

Meanwhile, according to managing director of Chelsea Financial Services Darius McDermott, cash Junior ISAs may not be the best option because inflation is higher than the cash rates available and therefore savings will technically lose people money. A more savvy approach, he added, is to opt for a “middle-ground” solution that involves splitting money between a cash Junior ISA and a stocks and shares Junior ISA.

It is arguably becoming increasingly important to save for youngsters as the costs associated with studying, getting on to the property ladder and so on are rising. By taking advice on issues of wealth management, consumers can often achieve better outcomes.

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