Different Types of Junior ISAs for You to Choose From
Are you thinking of opening a Junior ISA? Then, know the two types that you would want to consider.
10:01 22 March 2013
Junior ISAs replaced child trust fund as of November 2011. Children who were born on or after January 1st, 2011, are eligible to open Junior ISA.
Junior ISAs are basically the same as regular cash ISAs. The only difference is the annual contribution limit. Aside from that, they function similarly. Both are savings and investment wrappers, which shield your child’s savings from both income and capital gains tax.
There are two different types of Junior ISA and these are the following:
- Junior Cash ISA – This is basically the same as a cash ISA from a bank or building society. The savings account will earn interest based on the rate of the interest applied by the provider.
- Junior stocks & shares ISAs – These invest the money you contribute in equity-based products, which include shares and bonds. Other stocks and shares Isa also allow access to numerous investment trusts, funds and shares, gilts, and corporate bonds.
The interest you earn from stocks & shares ISAs are tax-free. However, the prices of the stocks and shares that you’ve invested may go up and down. Thus, there is a risk of losing not just the interest but also your capital.
The annual contribution limit is £3,600. This amount can be placed on cash Isa or stocks & shares Isa. It can also be split between the two types.
