Save £300 per month from birth and your child may benefit from a lump sum of nearly £104,000 at age 18. This is more than enough to pay for three years at university and have some left over for a deposit on a property. The figure, calculated by Hargreaves Lansdown, assumes a 5 per cent return on investments held in a tax advantaged junior Isa.
But while it is easy to see the advantages of starting investing early, many parents are put off by dilemmas over which junior individual savings account (Isa) they should be saving into, and what investments they should include.
Another factor to bear in mind is that April 2015 money held in child trust funds (CTFs), the junior Isa’s tax-efficient predecessor, can be transferred into junior Isas. Patrick Connolly, a certified financial planner at Chase de Vere, says allowing CTFs to merge with junior Isas will give parents an opportunity to secure a better financial deal for their children.