If you want to build wealth for your children, one effective way to do this is through investing in a Junior Individual Savings Account (JISA).
Not only this, but there are also various things you can do with this particular type of junior investment account, to increase the effectiveness of your savings.
Read on, to learn five key ways you can invest effectively in JISAs.
Seek financial advice
The first important method we recommend for investing in your JISAs is to seek financial advice from a modern wealth management service.
These financial experts can offer guidance on how to grow savings in your JISAs in the right way, according to your current financial situation.
Your adviser will take the time to fully understand your situation, including what your income is, how you spend your money and what you can realistically save each month or year.
As well as this, they can discuss any financial challenges you might be facing with your JISA investments, to ensure they directly address these concerns when developing your approach.
Make the most of your allowance
When investing in JISAs, it’s also important to ensure you make the most of your annual JISA allowance each tax year.
This determines how much you’re able to save each year, sheltered from tax. As of the current tax year 2023/2024, the annual JISA allowance is £9,000.
By using up your full allowance each tax year, you can end up growing a significant amount in your JISA for when your child can access the funds – after they’ve turned 18. This money can be withdrawn tax-free.
Establish your financial goals
Another way to invest effectively in your JISAs is to establish your goals in a financial plan. This is also achieved more efficiently with a financial adviser.
Together, you can outline what goals you have for your children’s future, and align these with the amount of money you’re saving in their JISAs.
For instance, you may wish for the money to be used for educational fees or to go towards purchasing a property.
The clearer you outline these goals, the more accurately you can grow the savings in your JISAs, as you’ll have a clear vision of how much you need to build in there and what it’ll be used for.
Invest in both types of JISA
There are two different types of JISA you can consider investing in for your children. Utilising both can further increase the effectiveness of your investments.
Standard cash JISAs allow you to save money each year and shelter it from tax. Stocks and shares JISAs allow you to not only save money, but invest it in various securities to make a potential profit.
By diversifying your JISA investments, you can save money as well as grow your savings with potentially successful investments.
On top of that, any growth made from these investments is sheltered from Capital Gains Tax – further adding to your JISA’s tax efficiency.
Track your investments
To increase the effectiveness of your JISAs, you should also make sure you’re tracking your investments accurately.
With a modern wealth management service, you can gain access to a range of advanced online tools to help you monitor, evaluate, and control your wealth – including your JISA investments.
These tools can show you all of your investments on one central platform, so you have full visibility of how much is in each JISA and how the investments in your stocks and shares JISAs are performing.
Also, you can plan ahead for your contributions to your JISAs, so you can prepare for how this might impact your wealth, and establish what you can realistically contribute.
By putting these five methods into practice, you can begin investing more effectively into your JISAs, and increase the chances of a successful outcome for your children’s finances.
Please note, the value of your investments can go down as well as up.