Imagine being 18 years old, with homeownership a distant goal, as it typically takes 16 years to save the average £63,855 deposit. University aspirations are also clouded by the prospect of carrying approximately £53,000 in student debt.
Now, picture this: on the morning of your 18th birthday, you receive a letter revealing you have over £400,000 at your disposal. This is the reality for the wealthiest Junior Isa holders in the UK, according to recent data.
Junior Isas, designed as tax-free savings or investment vehicles, allow parents and other family members to build a financial foundation for children. A Freedom of Information request to HM Revenue & Customs by financial planners Murphy Wealth shows that the top 25 Junior Isas in Britain now average nearly £400,000 each.
This sum is more than enough to eliminate average student debt seven times over. Children can contribute up to £9,000 annually to a Junior Isa until they turn 18, at which point they can access the funds.
Veli Aghdiran, 41, shared that he and his wife Maria initiated Junior Isas for each of their three children to broaden their future opportunities. Utilizing the child savings app Beanstalk, they have established three stocks and shares Junior Isas, amassing a total of £60,000 through regular contributions and family gifts.
Veli Aghdiran, 41, says he started a Jisa for each of his three children to ‘open up possibilities’ for them. He and his wife Maria have set up three stocks and shares Jisas on child savings app Beanstalk with a combined total of £60,000 – built up from regular deposits and gifts from family.
Planning: Veli Aghdiran and wife Maria have opened Junior Isas for their three children
The couple put in £200 a month for Carmen, seven, Leyla, five, and Arif, three. They insist the return has far exceeded the rates you can get in a cash Isa or a savings account. Investing tends to produce higher returns than savings over the long term though there are likely to be more bumps along the way.
Veli and Maria have opted for higher-risk portfolios in the hope of greater returns because their children are so young that they can afford to ride out stock market dips as these will not be noticed in the long run.
‘The thing with the Jisa is that the money is completely for them,’ says Veli. ‘If there’s any kind of further education they want to do or they would like to carry on studying afterwards, they can do that, without worrying about the debt.’
He adds: ‘But it’s up to them. They’re still so small. Judging by their current interests, Carmen would want to go on a training course to become a professional footballer, Leyla would want to become a ballerina, and the three-year-old boy would want to roar at things in a zoo.’
If, like Veli, you were to put £200 a month into a Jisa for the entire 18 years – your child could wake up on their 18th birthday to nearly £84,000 tax-free in an account that they control, assuming an 8 per cent return. For Veli, having three children this adds up to £252,000.
You would have to max out the £9,000 allowance for 18 years at an 8 per cent return to reach £330,000.
Clare Stinton, a senior personal finance analyst at investing platform Hargreaves Lansdown, says: ‘The advantage to giving early is that the money can benefit from compounding – returns don’t just add up, they build on themselves over the lifespan of the account.’
The money is officially the child’s money, and they can’t legally use it until they are 18, though they can control how it is invested at 16.
Veli, who leads a talent team in advertising, sees this as an advantage. He says: ‘It’s good to know that I can’t touch it, especially in times when there might be a temptation to raid an Isa to fund a family holiday, or pay for a bill that’s higher than expected, or whatever. It’s important to put that aside for them.’
The number of parents and grandparents paying the full £9,000 annual allowance into a child’s Jisa soared by 45 per cent between 2021 to 2023, Freedom of Information data obtained by wealth manager RBC Brewin Dolphin revealed.
Duncan Ferris, 32, who had a child with his wife only last month, has already decided to open a stocks and shares Jisa with investing platform Freetrade for their daughter Ari.
He aims to put £150 a month into the Isa until she is 18. Investing in a high-risk portfolio, the Isa could leave his daughter with more than £62,000 when she turns 18.
Duncan says: ‘We just wanted to give her a leg-up, and thankfully we are lucky enough to be in a position to do so.
‘I thought that if I opened my own Isa and controlled the money directly there was a risk I would lose track of it or I would end up spending it myself.
‘If it’s in her account, it’s set aside for her to have when she grows up. And there can be no mistake about that.’
- Are you saving regularly into a Junior Isa? Let us know: money@mailonsunday.co.uk
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