Junior ISA questions - transfer or keep separate

ChasingtheWelshdream

Hello wise savers and investors, I am hoping for a little bit of guidance.

My children (10, 12, 14) have cash junior ISAs which I have only been able to pay £5 per month in for the last few years. I am now able to afford a little more each month (£15 each) and have opened a Junior S&S ISA each with the hope they will get a slightly better return by the time they are 18. I have only ever had cash savings, other than the eldest who had a child trust fund at birth, which was transferred to a cash ISA when I opened the other ones.

I am unsure whether I should transfer the cash ISAs over, or keep them separate. These are the current cash ISA balances. We are not talking huge amounts but I would hope to have around £3k each for when they turn 18.

14 year £1900
12 year: £1366
10 year: £866

I would appreciate any thoughts, especially in terms of risk for the 14 year old as I only have 4 years to maximise before he can access it.

I am also able to choose which funds to operate within the ISA  (Scottish Friendly), and have a basic understanding that the older the child, the (potentially) safer it is to opt for 'safe' funds, but younger children may benefit from higher return/risk options. That is about my limit at the moment.

As I say, I know these are very low amounts, but I would just like to give as good an opportunity as I can over then next few years.

All and any opinions would be very welcome, thank you for reading. 


 

Alexland

I'm not a fan of friendly society products as market returns tend to be eroded by high ongoing charges and poor investment selection but I accept the accounts are simple to operate, usually have some cashback incentive to signup and accept low contribution amounts.

S&S investing is for at least the medium term 5-7 years preferably much longer to average out the ups and downs and as you say the kids are getting closer to age 18 when they can access the money but they may not choose to withdraw at 18 and might leave the money invested for longer. I'd suggest you have a think about the likely use of the money (eg house purchases in 20s or 30s, etc) which might help determine the investment timeframe and level of risk/volatility that might be suitable.

I would also give consideration to if you intend to target your contributions to try and level the valuations between now and 18? I'm going to end up contributing more into our youngest's JISA to bring it up to around the same valuation as our eldest's and while that might not be fair I am never going to tell them how much I contributed so all they will ever see is the final result.

Notepad_Phil

What will your 14 year old do with the money when they get to 18?

If they're going to take it all out and use it  as soon as they get to 18 then my opinion would be to keep it in cash, but if they're likely to think that they'll keep it until they need something after college/apprenticeship/univerisity etc then it may make more sense to move at least the currently saved money into some kind of equity fund.

Having it in funds could also be a route into talking about pensions etc and the importance of regular investing and long term growth.

ChasingtheWelshdream

Thank you both for your comments. 

Alexland: As a complete beginner with a very low amount I can stretch to each month, then yes, I did take advantage of a cash back offer. I don't expect huge returns, but I am very conscious that the £60 a year I have been managing is now worth less in real terms, so I hope they might do a little better with S&S.

I hope they will each have around £3k at 18 and I will be willing to make disproportionate contributions to the younger if needed. The eldest one had £500 contributed to his Child Trust Fund at the start, the middle had £250 and the youngest didn't qualify, so I'm not worried about things being 'fair.

Notepad_Phil: The 14 year old isn't great with money at the moment, he tends to fritter away whatever he has despite our best efforts to persuade him to save. I would hope he matures by then but alas I know we will have no control once he is legally able to access it. If he does spend it, one would hope he uses it for a useful purchase like a car.

The youngest on the other hand, very rarely spends his pocket money and is by far the best at saving for savings sake.