How to Invest in a Junior ISA

How much do you need to save, and where can you invest it, to fund your child's university education or first property purchase?

Holly Cook 2 December, 2014 | 10:23AM
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The year of 2014 was marked by a baby boom amongst my friends, resulting in me fielding numerous questions about how they can invest their hard-earned cash so that little Jonny and Jenny can pay their university fees in 18-20 years’ time.

Saving cash and investing in stocks and funds within a Junior ISA wrapper ensures your earnings (interest, capital gains and dividends) are free of tax. This is one of the most tax-efficient ways of generating funds for a long-term goal. An investment horizon of 18-20 years means you can afford to take on some risk to increase the likelihood of maximising your purchasing power.

How Much to Invest?

More than half of the universities in England and Wales charge the current maximum £9,000 per year, while Scotland’s universities are usually free to Scottish residents. For those outside Scotland, a three-year Bachelor’s degree could come in at £27,000 in fees alone, before you’ve even considered accommodation and living costs. Of course there’s no knowing where tuition fees will stand in two decades’ time, but it’s prudent to assume they won’t be getting cheaper.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Holly Cook

Holly Cook  is Manager, Morningstar EMEA Websites