For long-term growth, Stocks & Shares JISAs have regularly outperformed Cash JISAs. Here’s why:
Higher returns: historically, the stock market has consistently delivered higher returns than cash savings over the long-term. This means your child’s savings could grow significantly more in a Stocks & Shares JISA compared to a Cash JISA.
Time advantage: you have until your child turns 18 to invest in your JISA. This ample time allows you to ride out market fluctuations and build a substantial savings pot. Having time on your side helps you to look through short-term market fluctuations and focus on building wealth for the long-term.
Compounding growth: returns on your investments generate their own returns, leading to exponential growth. Invest £9,000 annually (the current JISA allowance) with a 7% return, and you would reach over £300,000 in 18 years. The final amount is roughly double what you will have put in (£162,000) – so it’s worth starting early!
Beat inflation: stocks and shares have the potential to outpace inflation, ensuring that the purchasing power of your child’s savings is preserved. Cash savings lose value in real terms if interest rates are lower than inflation.
Education: once a child turns 18 they will not only have the money in the JISA, they will have also received an invaluable lesson in the benefits of investing that will stand them in good stead for the future.
Did You Know?
Research shows that teaching children about money from a young age can provide a significant positive impact on their future financial security. Get your kids involved in the JISA process to teach them the importance of investing
