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Stocks and Shares or cash? The Junior ISA two years on.

If you’re looking to save for your child’s future, then you may be wondering what the best way to do so is. Junior ISA’s are the Governments answer to the discontinued Child Trust Fund and are an easy and very accessible way to save for your child’s future.

They’re now entering their third year of existence this month, but only 300,000 out of a possible six million eligible children have a Junior ISA in their name. They’re not the most straight-forward product, and since their introduction one thing has caused much controversy and confusion – cash, or stocks and shares?

The decision, for many, is one that requires lengthy research and a great deal of thought. After all, saving for a period of up to 18 years for your children’s future is something you want to get right.

Cash is a safer option, but in real terms inflation and low savings rates mean that the buying power of the money you have invested in cash could be lower at the end of the plan than the total amount you have put in.

On the other hand, stocks and shares are riskier in terms of the fact you can’t guarantee what returns on investment you’ll get, but they do offer greater growth potential. This is because, depending on the funds you choose to invest in, the value of your investment can go up or down.

While opinion between the two is split, Christine Ross, head of wealth planning at SGPB Hambros shares her concerns about investing in cash. She told the BBC: “If someone is going to invest for the very long-term, and by that I mean for more than ten years, in cash in real terms, the money is probably going to lose its buying power.

“Interest rates are very low at the moment, and inflation, the rate at which prices increase, is growing faster than the amount you get in interest”, she added

Andrew Gurton, adviser at, shares this view, and added suggestions for lowering the risk of a stocks and shares investment. He said: “One way to help manage this risk is to either spread your investment broadly, or to go with a provider who offers ‘smoothing’ on the fund you invest in.

“Smoothing is a process that holds back profit in years when the fund performs well, for years when the performance isn't quite as good. This is with the aim of always providing the fund with a bonus at the end of each year”, he continued.

Junior ISA’s allow a total investment of £3,720 this tax year, although this usually rises at the end of each tax year.

Need advice?

If you need help choosing a savings plan for your child, or would like more information on your options, please contact our financial advisers.

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