When it comes to saving, there are few worthier causes than our kids (well, most of the time…) Indeed, HMRC stats show that UK parents poured £874 million more into Junior ISAs (JISAs) than into their own stocks and shares ISAs last year – showing exemplary forward planning on the part of the nation’s mums and dads.
If you are not, however, one of this merry band of parental penny pinchers just yet don’t despair! There is still plenty of time to get in on the act; even if you have literally not a penny of your own hard earned cash to spare.
According to research from online investment platform Wealthify, it takes just £20 a week – i.e. the child benefit payment that most people get for their first child – to ensure that little Billy will comfortably be able to afford his first home come age 30; all without help from the bank of mum and dad!
Currently, the average UK house deposit is around £33,000, with as many as one in four UK house purchases relying on a parental contribution.
Michelle Pearce-Burke, chief investment officer and co-founder of Wealthify said: “There’s an increasing expectation on parents to help their kids financially when they reach adulthood. UK parents give an average £18,000 to each child towards a house deposit and can be expected to contribute up to £5,000 per year towards university.
“With the cost of higher education and property set to continue rising, parents who plan to help their children with these major life expenses will need to start thinking sooner rather than later where the money will come from.”
Baby savings steps
The robo-adviser has crunched the numbers, though, and says that saving £20 a week into a stocks and shares Junior ISA (JISA) from the birth of your child until their 18th birthday could give them £30,000 by the time they seize control of the account.
And if – instead of blowing that on a Paris Hilton-sized birthday party – they continue to contribute £20 a week to their JISA, Wealthify says Bill could have £70,000 come age 30. More than enough – one would hope – for at least a 10 per cent deposit in a broom cupboard in Lambeth come 2049.
The growth in popularity of the JISA may be an indicator savvy parents are already well ahead, with the number of JISAs opened from 2017/2018 up by 100,000 to almost one million new accounts, into which parents poured a staggering £902 million. That’s £874 million more than what was put into stocks and shares ISAs by UK adults that same year.
Ensure a future planet for them, too
Saving for our kids is important. However how and WHERE we put those savings is equally important. As avid Good readers will know, we’re all about the future here, which children are, of course, firmly destined for and in which we would like them to have clean air to breathe and (preferably) land to stand on.
As such, ensuring that your children’s investments are not financing the fossil fuel or mining industries and – for an extra slug of Goodness – arms, tobacco, plastic manufacturers and the the worst of the textile and transport industry is just common sense.
In recognition of this fact, Wealthily has launched its JISA offering, in which parents can choose to place its industry leading ethical fund. One of the best offerings among the robo-adviser community, the Wealthify Ethical fund includes funds run by a number of highly rated active managers in the space – which we like.
Pearce-Burke says: “At Wealthify, our JISA is a quick and easy way for parents to start building a nest egg for their kids that they can’t dip into when times get tough. We also wanted to give parents the additional choice to invest ethically – in the most sustainable businesses – towards their kids’ futures’.’
Green it yourself
Now: the portfolio isn’t perfect: there is still some oil and gas in there plus wide exposure to main markets through the passive funds. As ever, those truly committed to doing Good will need to do a little more legwork and open a JISA with a fund platform AND THEN choose the funds to put inside it (remember: a JISA is just a tax wrapper).
Leading JISA providers include AJ Bell YouInvest, Charles Stanley Direct, Fidelity, BestInvest and Alliance Trust Savings. Fees and charges vary, however, so be sure to make sure the right platform for you (as a rule of thumb, percentage based fees are better for lower value investors just starting out).
Then for funds you can take a look at our latest Good Investment Review: your guide to the best Good funds on the market. Some top picks from us, though? Oh, go on then:
Five Good funds for your child’s JISA
IMPAX Environmental Markets Investment Trust
Liontrust Sustainable Future Absolute Growth
Triodos Sustainable Pioneer