Today I helped my 12 year old son open and invest in a stocks and shares Junior ISA. He is thrilled! His older brother invested in a children’s ISA and recently progressed into a Lifetime ISA for his future house deposit. This good example, plus experience in cash saving paved the way for him.
Here’s how we invested in a Junior ISA
He recently won £100 in a chess tournament, so he
- Kept £20 to spend
- Saved £30 in cash his bank
- Invested £50 into stocks and shares Junior ISA (JISA)
- I matched his investment amount by way of encouragement
Which Junior ISA Provider did we use
We used the Youinvest platform by AJBell because it offers access to a wide range of funds and it has a low platform cost of 0.25%. Just be mindful of the £1.50 dealing charge per fund, so for smaller amounts opt for one diverse fund rather than lots that attract multiple dealing costs.
His Grandad also wanted to save for him and AJ Bell generates a link to share with relatives so they can easily contribute too. We can also add other investment products in the future, for example a pension.
There are many platforms and investment providers available and WHICH offer a detailed guide for you to to start your research.
Stocks & Shares Investment Research
My son won’t be able to access his Junior ISA at all for 6 years, so we opted for high medium risk and very broadly diversified funds. We specifically invested in funds not individual stocks and shares in order to spread the investment risk. If he’d needed it sooner than this I’d have considered a cash ISA instead.
We used Trustnet as our resource for fund information. He enjoyed the visual charts which provided the context for our research and conversation. He clearly understood that past performance does not indicate future performance
We discussed how the value can fall as well as rise. This was easily evidenced by the drop across all the funds we reviewed when covid-19 impacted them last year. We talked about how he would feel when his investment fell in value and calculated what a 20% fall would be in £pounds. We then compared that to the potential reward.
What surprised me was his genuine interest in the underlying companies and his thoughts on what would or wouldn’t do well. Even at 12 he has strong ideas about what he is interested in today and what he thinks will grow, survive and thrive in business and the wider world. For him this involved Technology, Ecology, Sustainability and the Environment.
What happens at 18?
On his 18th birthday it will cease to be a junior ISA and he will have full access and responsibility to all of it. He could spend the entire amount if he wants, or use some or all of it to start an adult ISA or Lifetime ISA.
My job today is to support him and provide the knowledge & experience to lay down foundations for good financial habits. He has 6 more years to practice this ‘spend-save-invest’ habit and nurture his genuine interest in his own longer financial planning goals.
If he continues into adulthood with the same questioning and reasoning he showed today, then I have absolute faith that on his 18th birthday he’ll make good choices.
For now I get to enjoy engaging with him invest in his junior ISA and I’ll be there on those days when the markets fall to reassure him to ‘keep calm and carry on investing’.
Disclaimer: This post is a review of what I did. It is not a specific recommendation nor does it constitute financial, legal or professional advice. Investments put your original capital at risk and you may get less back than you invest. Investments should be held for the medium to long term of 5+ years.