Smart Saving

Saving for the future today. Junior ISAs are the way forward to secure those things that your children will otherwise no doubt worry about in years to come.

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The Top Selling Christmas Toys 2000-2010

For children, it’s fair to say that there’s no more exciting time than Christmas. Unlike their adult counterparts however, they’re not excited by family, friends, food and drink. They’re motivated by one thing: presents. Although a Junior ISA may not inspire your sprog, nephew or niece to bound around the house in excitement  as the most a la mode new gadget or toy, investing in one will make them far more grateful when they turn 18.   Here are the most popular toys from 2000 to 2010 – and how much you could have given them if you’d saved in a Junior ISA instead: 2000 – Teksta the Robotic Dog After the success of the Tamagotchi a year or two before, Teksta the robotic dog was the most popular Christmas toy in 2000 and could sit, sniff, ‘fetch’, howl or perform on command – all without the smell or, well, personality of a real mutt. Plus, it looked like an AT-AT Walker from Star Wars. Price – £59 2001 – Folding scooters They’ve undergone a bit of a renaissance recently, by scooters were all the rage in 2001 – causing grazed knees across the country on Boxing Day. Price – £99

2002 – Bratz Dolls The original Bratz Dolls were unleashed in 2001 and by Christmas of 2002 they were a phenomenon with small girls – and some boys too. Meanwhile, Barbie looked on enviously. Price – £20.00 2003 – Beyblades The slightly more masculine Beyblades were the star of Christmas 2003. The spinning-top toy was responsible for a number of injuries in schools and homes and was also very competitively priced. Price – £8 2004 – Robosapien Cynics would deem the robosapien to be a slightly more advanced version of Teksta – but the robotic dog didn’t inspire a film that’s rated a whopping 4.4 on movie database IMDB, did it? No, no it didn’t. Price – £99 2005 – Nintendo DS Perhaps this was the year that hand-held consoles became big news. The Nintendo DS, a new generation of the ever-popular Game Boy was the most popular toy with children in 2004. Price – £149 2006 – Deal or No Deal Board Game Ah, 2006. Those were the blessed days when Noel Edmonds didn’t have that awful beard on Deal Or No Deal. Kids, parents and teenagers loved the board game that tied into the hit TV show in 2006. Price – £30 2007 – In The Night Garden Remember In The Night Garden? In Christmas 2007, its talking Iggle Piggle toy was the star of the show – so much so that the toy stores across the country ran out of stock when manufacturers Hasbro grossly underestimated demand. Price – £25

2008 – Elmo Live Since Sesame Street began, Elmo has been one of its most popular characters and the Elmo Live toy! was very popular with young boys and girls as it could joke, tell stories, sing and dance. Can’t say better than that. Price – £60 2009 – Nintendo Wii Nintendo enjoyed a consecutive year at the top of the Christmas charts in 2006 after the Wii revolutionised the way that families and children play computer games. Price – £129 2010 – The iPad Another big-ticket item, the simplicity and accessibility of Apple’s iPad made it a big hit with both young and old – while it also came with a not insignificant price tag. Price – £499 How much you could have invested Over those ten years, if you’d bought the most popular children’s toy every year, you’d have spent £1177 in ten years – nearly £120 a year. Junior ISAs come in a range of shapes and sizes, with some investments offering a greater risk and reward than others. But with a conservative annual growth rate of just 5% in a child ISA, your £120 a year could be worth £3,544.68 by the time your little one turns 18 – enough for a swish car, a special gap year or the world’s biggest collection of Beyblades. Image credits: http://www.flickr.com/photos/nickstone333/ http://www.flickr.com/photos/puuikibeach/

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An important life lesson or an unnecessary expense: what’s your pocket money policy?

Whitney Houston sang “I believe the children are our future, teach them well and let them lead the way”, but current economic circumstances may have you wondering how to teach your children even simple money management. Recent research reveals that UK parents part with £1.9 billion a year in pocket money, which can be an excellent tool for encouraging financial awareness. Here are some factors to consider when deciding your own policy on the matter. Why pay pocket money? With many parents contributing to savings plans such as Junior ISAs, is there a need to get children more involved in their own cash flow? Providing a child with regular pocket money can give them a realistic understanding of the cost of living and the value of money. Encouraging them to put money aside develops budgeting skills and letting them overspend will accelerate learning about the negative consequences of a splurge. Charitable giving can also be introduced as part of a pocket money agreement, making children aware of ways they can use some of their money to help others. When to give it Pocket money may be introduced from when children are old enough to count and know what they want to buy or save for. Some parents choose to reward chores being completed, others believe children should contribute to the running of a household without financial incentives. If you choose to pay for chores being done, you will need to decide if money gets withheld when they are not completed.  A better compromise may be to only pay for extra work undertaken (children should be expected to tidy their rooms, but could be rewarded for helping to clear out the attic or washing the car, for example). How much? A number of issues need to be taken into account here, not least your child’s age and what he or she will spend the money on. Avoid making comparisons with what other parents are paying; decide the amount that is right for your circumstances and set realistic expectations. Younger children will usually have simpler needs, spending their money on toys, while adolescents are more likely to buy clothes and have other lifestyle expenses such as mobile phone top-ups and cinema visits. Be careful about being too generous; the whole point is to teach children the value of money and prepare them for managing their future earnings.   There are no hard and fast rules when it comes to pocket money but agreeing to provide it can instil good money management from an early age.  And with confidence in the financial decisions of politicians and bankers at an all time low, Whitney’s words have taken on a whole new meaning today.

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The biggest pulling factors of using a Junior ISA

Many people have stopped using traditional savings accounts as the result of the Bank of England being at the lowest ever interest rate for over 18 months now. This has left many people feeling like their savings accounts are pointless. However, Junior ISAs have maintained strong and tax free throughout the depression – creating a perfect, long term savings account for your children. Some of the biggest benefits of having a junior ISA are:

  Tax-free savings

  Unlike traditional savings accounts, all the interest that is accumulated through a junior ISA is tax-free. You may think that just because your account is open in the name of your child it wouldn’t be taxed, unfortunately this is not true – you can claim the tax back from the HMRC, but it is a process that will need to be repeated every year. There are two types of junior ISA, the cash ISA where the interest is completely tax-free and a junior stocks and shares ISA where returns are not taxed for the most part.

  Building a nest egg

  As a parent you want to make sure your children get the best, including helping them achieve financial stability in the future. A junior ISA lets you set aside up to £3,780 for your child every tax year. Even if you only manage to put aside £2,000 every year from when your baby is born until they turn 16, you will have saved over £30,000! When you add in interest this sum becomes even bigger, creating a very helpful amount of money to allow your child some financial leeway in this tough economic environment whilst giving them stronger options for their future.

  You’re in control

  One of the biggest problems with your children having a traditional savings account is that they are able to take their money out whenever they fancy. This can lead to lots of money being frittered away on sweets, video games and One Direction tickets without your knowledge or permission. With a junior ISA you, the parent, are in control of the money – your kids aren’t able to take it out at will, giving you more control over how it is spent. Unfortunately, good things never last and, at sweet 16, your lovely, doe-eyed offspring will have complete access to the funds in their account. If you use the ISA to teach them about the value of money then this extra responsibility shouldn’t be a problem.

  Interest rises with CPI inflation

  We may be in an economic slump now, but over the next couple of years we could see a financial boom. Most saving accounts’ interest changes every year, giving you 12 months of good interest before reverting to the Bank of England interest rate. Junior ISAs provide a flexible interest rate that stays constant and rises with CPI inflation, meaning that you won’t have to be constantly searching around for the best possible deal. This reduces the amount of time you have to spend worrying about your child’s finances and gives you more time to enjoy being with your family.

Junior ISA Online provides a selection of tailor-made ISAs to suit your style of saving, helping you get the best out of your money and allowing your friends and family to contribute to your child’s future. If you’re looking for an easy, safe investment for your child’s future then visit Junior ISA Online and find out more.

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Junior ISAs Vs Child Trust Funds

Over the last few months thousands of parents around the UK have been signing a petition aimed at encouraging the government to allow the merger of Child Trust Funds (CTFs) and their replacement savings vehicle, the Junior ISA.

At present a child can either hold a CTF (if they were born between 1 September 2002 and 2 January 2011) or a Junior ISA but they can’t have both. Similarly a child with a CTF can’t currently convert it into a Junior ISA even if they want to, and it is this last point that parents are protesting about.

Why a Junior ISA is better than a Child Trust Fund

There are several good reasons why so many parents want to move their children’s money from a CTF to an ISA but the main one relates to the annual interest rates for each type of account. According to recent figures published by moneyfacts.co.uk the top paying child trust fund at the moment pays 3.05% annually. In comparison the top ISA for children pays 3.25%, unless you already hold an adult ISA with the Halifax and then your Junior ISA will benefit from an annual interest rate of 6%.

The difference in the interest rates may not seem like much but if you’re saving the maximum of £3600 per year and you save for 18 years the gap grows quite substantially.

And then there is the annual charge applied to every child trust fund account that isn’t applied to an ISA. The average charge for administration on a CTF is £30 and this has to be paid regardless of whether you choose to save using the account or not. Over the course of 18 years the administration charges alone add up £540, and if you add to this the cumulative difference in interest payments a child with a CTF could easily find themselves over £1000 worse off than a child with an ISA.

So what should you do as a parent?

Unfortunately, if your child has a child trust fund there is very little you can do at the present time to change this. The government is holding out on merging the two types of account so those individuals with a CTF are stuck with them for the time being. If your child was born after January 2011 though it makes sense to open a Junior ISA online if you want to save for your child’s future.  

As mentioned above, up to £3600 can be saved in an ISA each year and the interest paid on the money is tax-free. There is virtually no risk involved in this type of account however it is worth mentioning that any money you pay in can’t be taken out again until your child reaches the age of 18.

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Why use a Junior ISA?

Every parent wants to give their children the best they can. You treat them with care and make sure they have everything they need – finances shouldn’t be any different. There are many benefits attached to saving money for your child’s future, here are the top reasons to use a Junior ISA:

  Long term, tax free savings

  Junior ISAs allow parents to build up a large amount of savings over a long period of time without being taxed on the interest. Unlike other savings accounts ISAs provide a long term solution that is automatically tax free, meaning that you don’t have to worry about regularly changing the account or registering yearly with HMRC.

  High levels of interest

  Finding the right level of interest can be difficult, with the economy the way it is most saving accounts have low rates of interest. Junior ISAs have some of the highest interest rates available, often providing a fixed rate until your child is 18. There is a limit on how much can be saved tax free every year, this currently stands at £3,600 until the child is 16 when it increases to £5,640. If you filled this tax free allowance every year from when they were born to their 18th birthday you could save around £100,000!

  Limited access

  Unlike regular savings accounts, your child will not be able to access the money held in the Junior ISA until they reach 18. This means that they aren’t able to withdraw money on a whim and spend all their lifesavings in one foul swoop. When they turn 18, the Junior ISA rolls over into an Adult ISA which retains its tax-free status, and they gain full access to the funds.

  Set up a Direct Debit

  If you think the idea is great but you find it hard to make the time to pay money into your child’s account then an online Junior ISA might be the right solution for you. You can set up a direct debit to your child’s account for as little as £10 a month all the way up to £3,600 a year! This is also an advantage as you don’t have to worry about remembering to pay money in every month.  

  Everyone can contribute

  It doesn’t just have to be you paying into your child’s ISA, it is possible for friends and family to also contribute money to the fund. This can be extremely useful at times like christenings, birthdays and Christmas, when people like to give money as a present – by doing this you can ensure the money goes towards their future.

  How it will help at 18

  A lot happens at eighteen; your child is fully grown and is deciding what to do with their life. If you’ve been saving up for them from the time they were born then you’ve given them a huge boost when they come to making the all-important decision. The money you’ve invested into their future can help them put a deposit on a home, pay for their university fees, buy a car or it can allow them to travel the world.

  If you’re looking for the perfect Junior ISA savings plan, then Junior ISAs Online provide a range of plans to suit your needs. With a great selection of flexible plans, you can set up an ISA online easily and give your child a head start. For more information visit Junior ISAs online today.

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The Sentiment Behind Junior ISAs

As a very long-term form of saving for children, junior ISAs are proving to be very popular with parents, relatives and well-wishers of young people. With six million under-18s currently in the UK, Junior ISAs have been set up by the Government as a way of establishing a savings plan that culminates in a friendly financial nest-egg when the child turns 18 – ensuring that they can start their adult life in the best possible way. But what is the sentiment behind Junior ISAs? Why are they becoming increasingly popular? They’re not just for parents One of the best things about the Junior ISA is that anyone can contribute to making the future of the young person in question as rosy as possible. From a parent or grandparent to a distant relative or simply a family friend, anyone is able to help a child born outside of January 2011 and September 2002 with a Junior ISA – this is a saving option that enables gifts from all sorts, and encourages people to become more involved in a young person’s life and development.  They’re tax-free It’s important not to be cynical, but Junior ISAs are a great investment option for adults because they offer tax free solutions and limit the amount of tax that a person would have to pay. Before these plans were introduced, anyone who would want to help out a young family member or friend would have to do so out of their disposable income – that is, money that has already been taxed once. By giving it away up to £3,600 into a Junior ISA scheme before it’s taxed by your employer, like you would an ISA of your own, you’re saving yourself money in the long run.  They offer a chance for you to shape their experience Although it’s absolutely vital to let a young person become the individual that they want to be, and not stand in the way of their own ambitions, ideas and dreams, a Junior ISA is a great way for you to save for a specific experience that you’d like them to enjoy when they’re old enough. For instance, if they have non-British heritage, a Junior ISA can help them go travelling and take a trip to discover their lineage and where the family originated from. Alternatively, if you’re keen to help tap out artistic talent, a nest egg like this when 18 can help them buy the musical instrument or equipment they’ve always dreamed of, or to enrol on an interesting artistic course. No one else will help them It may sound harsh to say, but Junior ISAs came in to replace the Child Trust Fund, which did include a sum contributed by the Government if the savings were topped up by parents, and the only help you’ll get specifically for saving for a child’s future is from yourself. With a wide range of savings options available for your child or a young loved one, Junior ISA online can help you with an investment opportunity that suits your needs. For more information, visit them online today!