Merryn Talks Money
How UK Parents Should Be Saving for Their Children
Oct 22, 2024
Join John Stepek, a senior reporter and author of Money-Distilled, as he shares his insights on saving for kids using Junior ISAs. They discuss the benefits of these UK-specific savings accounts, focusing on tax advantages and contribution limits. John emphasizes the importance of parents' financial security before investing in their children's futures. They also tackle the significance of understanding costs associated with savings products, ensuring that parents make wise, affordable choices for long-term financial growth.
11:26
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Quick takeaways
- Junior ISAs provide a tax-efficient way to save for children's futures, with an annual contribution limit of £9,000 and strategic investment recommendations.
- Parents should prioritize their own financial health before saving for children, ensuring that personal ISAs and pensions are fully funded first.
Deep dives
Understanding Junior ISAs
Junior ISAs serve as a simple and tax-efficient way to save for children's futures, allowing parents or guardians to invest up to £9,000 per year. From birth to age 16, the account is controlled by the adult, while between ages 16 and 18, the teen can manage the account without access to the funds until turning 18. This investment vehicle can be funded through cash or stocks and shares, with a strong recommendation to opt for equities for better long-term growth. Keeping funds in cash over the long-term is discouraged due to low returns and potential capital erosion by inflation.
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