Interactive Investor

Junior ISAs turn 10 and the average pot size hits £13,000

1st November 2021 10:11

Jemma Jackson from interactive investor

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interactive investor reveals how parents are investing and why the need for long-term savings for children has never been greater.

This week marks the milestone 10-year anniversary of the launch of Junior ISA (JISA) accounts.

Among interactive investor JISA (stocks and shares) account holders there are 110 with a value of more than £100k and a further 1,078 with between £50k and £100k. Of course, some of the largest JISA pots may have started out as Child Trust Funds and have been running for longer than 10 years.

One lucky Junior ISA ii account holder already has enough tucked away to pay for the average UK detached house (if the latest UK House Price Index is anything to go by), possibly with enough left over for a loft conversion.

The top three most-held stocks in JISAs over £50,000 are Scottish Mortgage (LSE:SMT), Fundsmith Equity, and F&C Investment Trust (LSE:FCIT).

More broadly, the average ii JISA value is £13k, with Scottish Mortgage Investment Trust and Fundsmith Equity once again ranking one and two, respectively, on the most-held investments list with Vanguard LifeStrategy 80% Equity fund in third position.

Interestingly, while ii’s youngest adult customers (18-24 year olds) seem to have, on average, a preference for investment trusts, the bulk (45%) of the average ii JISA portfolio is invested in funds, a fifth (20%) in equities, 13% in investment trusts and cash, respectively, with the remaining 8% in exchange-traded products.

interactive investor offers Junior ISAs only to existing customers, but at no extra cost. Customers can have as many free Junior ISAs as they have children, and they can invest with just £25 per month. Customers can avoid paying any trading costs for their children if they elect for ii’s free regular investing, making monthly contributions into funds, investment trusts, or popular UK shares.

Other notable ii JISA account statistics:

  • Average ii JISA portfolio value is £13,285.
  • 11% of ii JISA accounts are fully subscribed (i.e. maxed out the £9,000 annual tax-free contribution allowance).
  • Average age of an ii JISA accountholder is 9 years old.

Myron Jobson, Personal Finance Campaigner, interactive investor, says: “It has been 10 years since the launch of JISAs, and with a generous £9,000 annual allowance, they are great way to save tax free for your kids.

“Our Junior ISA customers are perhaps some of the lucky ones, and not everyone is fortunate enough to be able to set money aside for their kids. But the need for long-term saving for children has never been greater amid the spiralling cost of university, increasingly larger deposits required for the purchase of first homes as well as broader rises in the cost of living. And younger generations are likely to feel the financial pinch in the coming years as part of measures to address the cost of the unprecedented spend on Covid economic support packages.

“Even small amounts of money invested regularly can make a huge difference over time. Putting away £50 each month over 18 years, assuming an annual growth rate of 5%, could leave you with a pot of £17,533 – but that rate of growth is far from guaranteed, and investing always comes with risk.

“While stock markets can be volatile on a day-to-day basis, a glance at history shows that they have a knack of delivering inflation-beating returns over long periods of time. There are no guarantees in life – and that is something long term investors need to be comfortable with. Most Junior ISAs are going to be inherently very long term because they cannot be accessed until the child is 18, so there is ample time for short-term bumps in stock markets to be ironed out.

“The Junior ISA allowance stands at a generous £9,000 for each tax year but, in reality, few are fortunate enough to maximise the allowance, with the average parent saving £1,180 into a stocks and shares JISA account in the 2019-20 tax year, according to the latest HMRC figures available.

“It is difficult enough investing for yourself, so the prospect of investing for your children and the possibility it may go wrong is a challenge for even the most experienced investor - which may explain why so many parents choose to save their Junior ISA in cash. However, history shows that even a ‘middle of the pack’ fund is likely to compare favourably with cash over 18 years. So, you don’t need to be an expert stock picker to benefit.”

Top 10 most-held investments in Junior ISA accounts on interactive investor

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

Please remember, investment value can go up or down and you could get back less than you invest. If you’re in any doubt about the suitability of a stocks & shares ISA, you should seek independent financial advice. The tax treatment of this product depends on your individual circumstances and may change in future. If you are uncertain about the tax treatment of the product you should contact HMRC or seek independent tax advice.

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