Money Moral Dilemma: Should we top up one of our kid's JISAs if they're not worth the same?

MSE_Kelvin

This week's MoneySaver who wants advice asks…

My wife and I set up junior stocks & shares ISAs for our two children when they each turned one. We pay the same amount into both and invest in the same funds, as we want to treat them equally. Yet as there are four years between them, the investments will be subject to different market conditions - so one account could be worth much more by the time they each turn 18. If that happens, should we make up the difference so both children end up with the same amount?

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El_Torro

I can see an argument for doing it. Also since there is a 4 year age gap you may want to take inflation into account as well, for the younger kid.

Or you may just decide not to overthink it and each kid gets what they get.

sheramber

If the younger kid’s has matured at a higher value than the older one wil you pay the extra to the older one?

kimwp

Seems fair to make them at least roughly equal. The difficulty is in making them economically equal - eg if for a deposit, what if houses prices drop/increase between when they each receive the money? Or when they are in a position emotionally/life stability-wise to buy? If you equal them at the point of the first one receiving it, in theory, the first one will then match the second's if you don't continue to fund the second's as they will be in the same market - but it might be that the first needs to use the money, whereas the second's life is still being fully funded, so they money can grow more.

Complicated.

CapeTown

Yes. Treat the children equally

Jemma01

It's not relevant to your children how they got the money, and the options you took to collect it, what matters is they get an equal amount (with respect to inflation as well).

In light of that, the idea of investing it in the same way, seems bizarre. You can experiment and see which one is better. In the end, they should get an equal amount.

Sachakins

No. Let the funds take their course.

Since the younger one will run for 4 years after the other one matures.

By which time they could likely get about same amount anyway.

jacquifef

No, don’t plan to top them up.

You, as parents, have treated them equally. The market is what has treated them differently.

Scenario: Child 1 is 18 at the peak of the market. £100,000. Child 2 at this point has £75,000. 4 years later, the market falls to its lowest. Child 2 now has £3000. Are you really going to be able to make up that £97,000? Obviously I have made up these numbers, but the point stands.

What Child 2 should do in this case is leave the money invested, in the adult ISA that his or her account will have been converted to. With time, that account should grow back to a higher level than before (that is what has happened with previous crashes - remembering past performance is no guarantee of future etc).

What you should do is have the ability to help with whatever expenses you were hoping to cover with it - whether that’s the parental contribution gap for university, or something else. Now obviously if the plan is that you’d like them to make a house deposit with it, Child 2 will have to wait for the market to bounce back. But 18 year olds don’t need to be buying houses.

Also make sure you teach your children how to handle money because you want the money to be a blessing and not a waste or a curse.

M4rkOne97One

I would let both S&S fund amounts be decided by the market. If you are concerned about one having more than the other then open a cash JISA's for them when they reach certain age, so that they will then have similar amounts. As they get older, educate them on savings/investing and let them decide if their S&S JISA is funded, or their cash JISA. That way they are involved. Once they reach 18 the money becomes theirs, to do with as they see fit. Which becomes another consideration if we are talking about large sums of money.

Beauborg

By trying to make everything equal you won’t be teaching them resilience. Life can never be equal. What if one of them falls over and breaks their leg?

Instead, emphasise that you love them equally. But help them to learn that making comparisons in life never brings happiness. There will always be differences.

craigmorley

When they're 18 they can legally spend it on whatever they want. Are you cool with that? Personally, I haven't gone down the JISA route. My wife and I have joint investments. When we are ready to give the kids money (and we know they aren't going to blow it) we'll give them equal amounts. Perhaps I'm too untrusting, but I don't like the idea of losing control of significant sums of hard-earned money to 18 year olds without a plan…