Saving Money for the Little Ones
I’m usually pretty good at spending money, but what about saving it? Wanting to be sensible about saving for our children’s future, I have investigated some savings plans and spoke to Scottish Friendly, who specialise in child and family investments, to find out how you can make the most of your money with a JISA.
What’s a JISA?
A JISA is an ISA for the kids! It stands for Junior Individual Savings Account. The JISA replaced the Child Trust Fund when it was discontinued in November last year and is basically a tax effective way to save or invest for your kids. So if you’re looking to put aside a little something each month to give a lump sum to your child when they are 18, or want to save or invest towards something specific such as university fees, a JISA could work well for you.
How does it work?
If you are thinking about getting a JISA on behalf of your child, you’ll need to know exactly how it works if you want to get the very best value for money, so here’s a run down of the basics:
• Savings or investment: The JISA is available in two types: ‘Cash’ or ‘Stocks and Shares’. A Cash JISA works like a regular savings account: money put in is secure and generates interest. A ‘Stocks and Shares’ JISA is an investment account – money contributed is invested in the stock market. Bear in mind, like any investment product, the value of shares can rise and fall on a daily basis and your original investment is not guaranteed. A child may hold both a Cash and Stocks and Shares JISA at the same time, up to the current annual limit of £3,600.
• Tax protection: This is the best bit. Returns generated by interest or investment in both the Cash and Stocks and Shares JISAs are exempt from income and capital gains. Tax treatment depends on individual circumstances and tax law may change in the future.
• Contributions: Once the JISA is set up by a parent or guardian, anyone may deposit money in a child’s JISA, so rather than all the dilemmas about what to tell people to buy for your children’s birthdays/Christmas, kindly request that all those generous aunts and Godparents pop some money in their JISA instead?
To find out more about the JISA and the other investment plans appropriate for children/families (including Parent’s and Grandparents flexible plan) please visit www.scottishfriendly.co.uk