Parents and guardians could hugely increase the savings of their child with a Junior ISA. Wealth firm True Potential is urging families to consider setting up an account, as maxing out a Junior ISA each year until a child turns 18 could equip them with sufficient savings to buy a property and pay for a three-year university degree.

This is based on contributing the maximum annual amount of £9,000 into a stocks and shares ISA expected to grow at a standard rate of six percent, which would accumulate to £278,150.87 by the time the child reaches 18. The current average price for a first-time house sits at £249,000, while a three-year university course stands at an annual cost of £9,250.

Neil Rayner, head of Advice at True Potential, said: “Starting early and establishing a routine of saving regularly, even in small amounts, can significantly benefit your child’s long-term financial health. It’s important to set realistic goals – whether it’s helping them through university, buying their first car, or contributing to a house deposit.

A woman checks her finances
Parents and guardians have been encouraged to look at opening a Junior ISA (Image: Getty)

“Our research shows that with wise investments, these goals are well within reach.” Parents able to manage only modest savings deposits could still see considerable growth over time, as an investment of just £50 per month could augment to nearly £19,000 by the time the child turns 18.

Even though a Junior ISA presents numerous benefits, many remain oblivious to the account. Only 27 percent of people have a good understanding of how ISAs function, as found through a survey conducted by the group. Parents and guardians have control over the Junior ISA until the child reaches 18, at which point the funds are transferred to them. Other family members and friends can also contribute to the pot, helping to build up savings for the child.

One of the key benefits of an ISA is that it’s entirely tax-free, with no tax due on any interest or investment growth, or on any income derived from the ISA.