Helping children save for their future

Tuesday, 28 February 2023

Witan’s Investment Director, James Hart explains how you can save for your children or grandchildren and the importance of starting sooner rather than later.

A good way to kick-start your child or grandchild’s financial future is with a stocks and shares Junior ISA (JISA). The sooner you open their JISA, the more their wealth has the potential to grow over time. With a JISA:

The funds cannot be accessed until the child turns 18
You can invest up to £9,000 a year into a JISA
A JISA has to be set up by a parent or guardian, but anyone can contribute

James Hart, Investment Director at Witan Investment Trust plc, said: “With the rising cost of living, higher inflation and an uncertain economic environment, it has become more challenging for today’s younger generation to put money away for their future.”

University tuition fees currently exceed £9,000 a year, meaning many students are likely to graduate with significant debt. In 2022, the average age of a first-time house buyer in England was 32, while the average deposit was £62,470^[1]. In addition, with average rents running at c. £1,200^[2] per month (and twice that in London), saving for such a deposit is becoming increasingly difficult.

James added: “Opting to invest in a JISA is a great way to give children a head start in life. It is also an excellent way to help them understand saving and investing, giving them life skills that really are not taught in most schools.

By starting to save early, you can put your child or grandchild on the path to a solid financial future. Any amount (up to £9,000) can be invested each year so, even a more modest sum can grow over the years to provide a sizable pot which can be accessed once they reach adulthood.”

Witan Investment Trust shows below how investing regularly into a JISA can benefit from investment growth and compound returns*.

Taking the last 18 years as a basis for calculation, although JISA’s were not introduced until 2011 with a lower maximum allowance, if we assume you invested £9,000 into a JISA investing in Witan Investment Trust shares on the day of a child’s birth (in this case, 31st December 2004) and the same amount on each subsequent birthday (as well as re-investing the previous year’s dividends), the JISA would be worth just over £300,000 by the time they reached their eighteenth birthday on 31st December 2022. This represents a tax-free investment gain of £145,000. Please note that JISA product fees may vary according to JISA provider and have therefore not been included in this calculation.

Source: Witan & Morningstar. Please note that fees charged by JISA providers are variable and have not been included in the calculation.

James Hart, Investment Director at Witan Investment Trust plc, said: “It can feel daunting to know how to provide financial support to your children or grandchildren. Yet, by making an annual contribution into a Junior ISA, you can start to lay strong foundations for their financial future.”

^[1]https://www.lloydsbankinggroup.com/media/press-releases.html
^[2]https://www.rightmove.co.uk/news/rental-price-tracker/

* Witan Investment Trust is an equity investment. Please remember that past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise as a result of currency and market fluctuations and you may not get back the amount originally invested.

Issued and approved by Witan Investment Services Limited FRN 446227 on 22 February 2023. Witan Investment Services does not provide investment advice and you should seek independent financial advice.

Discrete Performance*	Q4 2017 Q4 2018	Q4 2018 Q4 2019	Q4 2019 Q4 2020	Q4 2020 Q4 2021	Q4 2021 Q4 2022
Share Price (Total Return)	-8.1%	22.1%	2.7%	11.9%	-9.8%
Net Asset Value (Total Return)**	-8.4%	21.3%	4.2%	15.8%	-10.2%
Benchmark (Total Return)***	-6.6%	20.1%	9.5%	19.9%	-6.2%

* Source: Morningstar. Total return includes the notional investment of dividends.
** The Net Asset Value figures value debt at fair value.
*** Witan’s benchmark is a composite of 85% Global (MSCI All Country World Index) and 15% UK (MSCI UK IMI Index). From 01.01.2017 to 31.12.2019 the benchmark was 30% UK, 25% North America, 20% Asia Pacific, 20% Europe (ex UK), 5% Emerging Markets. For more information go to http://www.witan.com/support/legal-information

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Helping children save for their future

Witan’s Investment Director, James Hart explains how you can save for your children or grandchildren and the importance of starting sooner rather than later.