Saving Cash for Your Child is a Waste

Saving cash on behalf of your offspring as tantamount to throwing money away; instead, invest small amounts regularly in a top-rated equity fund to build wealth by the time they come of age

Kara Gammell 12 November, 2015 | 10:55AM
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It’s been four years since the launch of Junior ISAs (JISAs), the tax-efficient plan to help parents and guardians build up a long-term savings pot for their children. Savers can put up to £4,080 annually in a Junior ISA and invest in any combination of equity funds, bond funds and cash, but these accounts have failed to meet their full potential thanks to low interest rates.

Cash a Terrible Way to Save

“Cash JISAs are a simply terrible place to park wealth for the long term as the real value of the capital will be eroded over time by the corrosive impact of inflation, which is the silent assassin of wealth,” says Jason Hollands, managing director at Tinley BestInvest.

What’s more, interest rates on these cash accounts are continuing to fall. Furness Building Society, for instance, once offered a best buy rate of 3.05%. This has been cut repeatedly over the last couple of years and the rate now stands at 2.10%, while Halifax dropped the rate on its Junior Cash ISA (linked to an adult ISA) from 6% to 4%. Skipton Buidling Society, which also once offered a competitive rate of 3.02%, chopped its rate to 2.65%, sending it falling off the best-buy tables.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
ASI Global Absolute Ret Strat R Acc78.00 GBP0.26Rating
BNY Mellon Real Return A GBP Inc130.79 GBP0.86Rating
Fidelity Index Emerging Markets P Acc187.98 GBP0.38Rating
Invesco Global Tgtd Rets UK Acc55.21 GBP0.13Rating
Scottish Mortgage Ord1,437.59 GBP0.78Rating
Vanguard FTSE Dev Wld ex-UK Eq Idx £ Acc518.70 GBP0.19Rating

About Author

Kara Gammell

Kara Gammell  is a freelance journalist and author, specialising in personal finance and consumer issues, writing for