Investing for the next generation: JISA or Junior SIPP?

Being a parent means loving, caring for, and guiding them to fulfil their potential. From homemade meals to bedtime stories, it’s about doing what you can, day after day, to give the next generation the best possible start.

But what if you could extend that care even further by helping to secure their financial future?

On Global Day of Parents, let’s look at how you can set your child up for lifelong financial wellbeing, from teaching them the basics of money to giving them a financial head start with a JISA (Junior ISA) or even a Junior SIPP (Personal Pension). These small acts, while they’re young, could pave the way for something much bigger in adulthood.

Start small, but think long-term

It might not seem like much, but investing even a modest amount each month for your child, say, £100, can really add up over time. In a Stocks and Shares Junior ISA, that money has the potential to grow significantly, thanks to compound returns.

Here’s how your monthly £100 investment could grow if you started when your child was born.

These figures are for illustration only and assume a 7% annual return, which is broadly in line with long-term average stock market returns. Actual returns may vary. Please remember: Investments can go up and down in value. You may get back less than you invest. The figures shown are illustrative only and not guaranteed.

By setting aside £100 a month, you’re not just building a nest egg for university, a first home, or travel, you’re giving them freedom and options when starting their adult life. And if you encourage them to leave it untouched when they turn 18 and keep it invested? It could be the foundation of wealth building for them (even if they never invest another pound!).

JISA or Junior SIPP – which is right for you?

Both Junior ISAs and Junior SIPPs (Self-Invested Personal Pensions) offer powerful, tax-efficient ways to invest for your child’s future. A Junior ISA is generally suited to medium-term goals like university or a first home, while a Junior SIPP is designed for long-term retirement planning.

• Junior ISA: pay in up to £9,000 per tax year, tax-free growth, no capital gains or income tax, and your child can access the money at age 18. Ideal for education, travel, a deposit on a house, or even starting their own business. They can also transfer it to a standard ISA and keep investing after they turn 18.
• Junior SIPP: You can contribute a maximum of £2,880 per tax year to a child’s SIPP, but you’ll benefit from 20% tax relief on contributions, bringing the total to £3,600 per year. It’s a longer-term option, as your child can’t access the money until later in life (currently age 57+), and the power of long-term compounding could make it a strong contender for building future wealth.

Teach them how money works

Creating wealth isn’t just about putting money away. It’s about mindset, too. As your children grow, helping them to understand how money works is just as important. Focus on teaching them how to budget, save, invest, and avoid bad debt.

Try these simple tips:

• Let them help you set a family budget.
  
• Use pocket money account or app to teach saving, spending and giving.
  
• Introduce them to the concept of interest and investing using a simple app or calculator.
  
• Involve them in discussions about your own financial goals. Showing how you save or invest for life’s big events and purchases.

Build knowledge, not just their bank balance

Helping your children is about more than just a lump sum of money. It’s about giving them the tools, habits, and confidence to build their own financial future.

Small, regular contributions to a JISA or Junior SIPP are a great place to start. But the impact of your actions and teachings today could go far beyond childhood and into their adulthood, their retirement, and even into the lives of their own children.

On this Parents’ Day, consider starting that journey as soon as you can. And while setting up an account for them today is a great start, don’t forget to educate and involve them – the aim is to empower them for the future.

Ready to get started?

We make it easy to invest for your child’s future with a fully managed Junior ISA. You choose the monthly contribution, we do the rest – from selecting the right portfolio to managing it over time. And, when they’re ready, you’ll know they can confidently manage their money and you’ve given them the best possible start in life.