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Junior ISA: cash vs stocks and shares

September 2022

Junior ISAs (JISAs) are a good option to start saving for your child’s future. When you open a JISA, you’ll need to choose between a cash JISA and a stocks and shares JISA. Find out what these options mean, how they compare and what could be the best choice for you and your family.

What are junior ISAs?

JISAs are tax-efficient savings accounts for children. They can be opened by a parent or legal guardian for any child under the age of 16, as long as that child doesn’t have a Child Trust Fund.

Anyone can pay into a JISA, but the money will be locked in for the child, who will only be able to access it when they turn 18.

There are two types of JISA: cash and stocks and shares.

What are stocks and shares junior ISAs?

Stocks and shares JISAs are investment accounts for children. Money that is paid in is invested in the stock market instead of being held in cash. This has good potential for growth over the long term, but the value of stocks can go up or down which means your child may end up with less money than has been paid in.

What are cash junior ISAs?

Cash JISAs are savings account for children. The money you put in grows over time by building interest, just like with current accounts. This means your money is protected from changes in the stock market, but it could lose value if inflation goes up more than interest rates.

How do cash junior ISAs and stocks and shares junior ISAs compare?

When you’re opening a JISA for your child, you want to make sure you’re making the right choice for their future. We’ve put together a comparison of some of the key things to consider when choosing between a cash JISA and a stocks and shares JISA.

What are the alternatives to junior ISAs?

There are a few ways you can save for your child’s future without opening a cash JISA or a stocks and shares JISA for them.

  • You can open a junior bond for them, which requires fixed monthly or yearly payments.
  • You could put money away for them in your own ISA.
  • You can dedicate a normal savings or current account to saving for your child.

You can read more about this on our children’s savings guide.

Cash junior ISAs Stocks and shares junior ISAs
How do I open it? Open it directly with a cash JISA provider. Open it directly with a stocks and shares JISA provider.
How does it grow? Grows by accumulating interest. Interest rates vary between providers. Grows by investing in the stock market. There are a variety of fund options to choose from.
What are the risks? Money may lose value over time, since inflation can be higher than interest rates. Investments may lose value due to changes in the stock market.

Weighing up your options

There are a few things worth keeping in mind if you’re thinking of opening either a cash JISA or a stocks and shares JISA for your child.

Can a child have both types of junior ISA?

Yes, your child can have both a cash JISA and a stocks and shares JISA open at the same time, but they can’t hold more than one of each. It will still only be possible to pay up to £9,000 in total each tax year into a child’s JISAs, no matter how many they hold.

Can a child have a Child Trust Fund and a junior ISA?

No. Junior ISAs can only be opened for children aged 16 or younger who don’t already have a Child Trust Fund. However, you can transfer a Child Trust Fund to a junior ISA.

Can a 16-year-old child have both a junior ISA and an adult ISA?

Cash ISAs can be opened by anyone aged 16 or over. That means anyone between the ages of 16 and 18 can hold any type of JISA as well as a cash adult ISA at the same time.

They can’t open a stocks and shares adult ISA at 16, as you need to be 18 or over to invest in the stock market.

Are stocks and shares junior ISAs risky?

Because they invest in the stock market, there is the possibility that your child could get back less than has been paid into a stocks and shares JISA.
However, they do have good long-term growth potential when compared to cash JISAs, where your money is protected but could lose value over time due to inflation.

How do I find out how my junior ISA investments are performing?

If you hold a JISA with us, you can log in to your online account, where you’ll be able to check how your JISA investments are doing.

Other providers might be different, so make sure the provider you choose gives you an option to check on your investments that’s comfortable for you.

Can I cash in a junior ISA and reinvest elsewhere?

No. Any money paid into a JISA is locked in for the child until they turn 18, unless your child passes away or is diagnosed with a terminal illness.

However, you can transfer JISAs between providers without taking any money out.

Junior ISA

Our OneFamily Junior ISA

With our stocks and shares Junior ISA you can start investing from just £10 per month up to a maximum of £9,000 each year on behalf of a child. Anyone can pay in, and the child will gain access to the account once they are 18 years old.

Explore Junior ISA

Stocks and shares JISAs have good long-term growth potential, but the value of your investments can go up or down and you child could get back less money than you’ve put in.

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