ISAs for the best junior stocks and shares

One excellent method of tax-efficiently saving for a child is through a junior stocks and shares ISA

However, selecting the best investment platform can be challenging. Some of the top junior stocks and share ISAs are disclosed by us.

As the year draws to a close, it is worthwhile to save money for your children in addition to your own ISA allowance.

A total of £9,000 can be contributed to the account by parents, friends, and family members each tax year. Interest and investment gains are also tax-free.

Since their introduction in 2011, junior ISAs have become more and more popular. Junior ISAs come in two varieties, just like adult ISAs: cash ISAs and stocks and shares ISAs.

Approximately 42% of the £1.05 billion paid into junior ISAs during the 2022 - 2023 tax year was in cash, according to the most recent official figures. 1,220 subscriptions on average were made.

Particularly if the child is young, junior stocks and shares ISAs are frequently a better option than their cash counterpart.

This is due to the fact that shares nearly always outperform cash over extended periods. For a baby, parents can open a junior ISA, and the funds are locked away until the child turns 18, giving you plenty of time. Therefore, you should have enough time for your child's savings to weather any downturns in the market.

Choosing which junior stocks and shares to open in an ISA, however, can be overwhelming. Numerous platforms for investing are available, each with unique advantages and disadvantages. Some are very affordable, while others might provide better customer service or a wider range of investment options.

To assist you in selecting an easy-to-use product that should accumulate a respectable nest egg for your child to spend or save when they turn eighteen, we have compiled a list of the top junior stocks and shares ISA platforms.

Top junior ISAs with affordable fees.

The amount you spend on fees is the one aspect of investing that you do have control over, as most investors are aware. It is impossible to predict future investment returns, but by selecting a product with minimal fees, you can lessen the effect of fees reducing your returns.

The least expensive junior ISA will be determined by your intended use, including how much you want to deposit, whether you want to purchase funds or shares, and how frequently you want to trade them.

We asked Candid Financial Advice and Compare Fund Platforms founder Justin Modray to do the math for a 5,000 junior ISA with five funds to get a sense of how the costs add up. Taking fees for the underlying funds out of the equation, the annual costs of six inexpensive junior ISAs compare as follows.

The least expensive are Fidelity and Hargreaves Lansdown because they don't charge an annual platform fee; however, like most providers, you will still be responsible for paying fees on the underlying investments. When buying or selling investments by mail or over the phone, be aware of fees.

In March 2023, Hargreaves Lansdown slashed the annual fee for its Junior ISA to zero in an effort to attract younger investors.

Modray says that low platform fees and good investment options are crucial for parents selecting a junior ISA platform. Making sure there are no fees associated with moving the account to a different location in the future is also important. For instance, Charles Stanley Direct charges £10 per investment to transfer the ISA "as is" (as opposed to liquidating the investments and transferring the ISA as cash).

Modray tells BFIA: "Investing in your child's future can be done very well with a junior stocks and shares ISA. Just be sure to monitor charges and choose investments wisely. Low-cost index-tracking funds that track major stock markets would be a wise place to start if you're not sure where to invest.

Junior ISAs who have won awards.

Fees are crucial, but if you're not a seasoned investor, you also need to feel at ease with other features like customer support and usability.

A parent or guardian must open the junior ISA, but anyone can deposit money into it as long as they don't go over the 9,000 annual limit.

We examined Boring Money's Junior ISA Best Buys, which showcase the top stocks and shares junior ISAs for novices saving for children. The five 2024 winners are as follows.

Fidelity (4.5 stars out of 5) Hargreaves Lansdown (4.5 stars) Moneyfarm (4 stars) Vanguard (4 stars) Wealthify (4 stars) Boring Money points out that Wealthify is very user-friendly and that you can invest with just one dollar, while Vanguard is inexpensive (though it may have a drawback in that it only offers funds, not shares).

Moneyfarm was also commended for being "very easy to use", and that it was a good option for beginner investors.

Boring Money appreciates Hargreaves Lansdown's "completely free" service and outstanding customer support. Fidelity received praise for its resources for investment research.

What are the primary junior ISA regulations?

Go ahead and transfer to a competitor if you have a junior ISA set up, possibly in order to lower fees, improve user experience, or increase your investment options.

Parents are free to transfer their junior ISA to a new provider, but be aware of any exit fees (transferring a stocks and shares account "in-specie" may incur fees; in this case, think about converting to cash first).

Moving a child trust fund (CTF) into a junior ISA is another option. Since CTFs are now regarded as outdated, legacy products, doing so could greatly reduce your fees and expand your investment options.

You can divide the 9,000 annual allowance between a cash junior ISA and a stocks and shares junior ISA, as previously mentioned. In a single tax year, you could deposit £2,000 into a cash junior ISA and up to £7,000 into a stocks and shares account.

Remember that a child can only have one junior ISA for cash and one junior ISA for stocks and shares.

Adults have a 20,000 allowance for their ISAs, which is in addition to the 9,000 limit.

Although teens can take control of the account as early as age 16, the money in the junior ISA belongs to the child and cannot be withdrawn until they turn 18.