The information provided in this article was accurate at the time of publishing and should be read in the context of the date it was published. Views in this article are those of the author alone and do not necessarily represent the view of Scottish Friendly.

This week is the third anniversary of the Junior ISA (JISA). Designed as a way for parents – and family and friends – to save for their children’s future in a tax efficient way, the JISA was introduced in November 2011 to replace the Child Trust Fund (CTF).

The JISA has proven very popular. Currently, nearly four out of every five parents are actively putting money aside for their children’s long term future, according to research carried out for Scottish Friendly*with 21 per cent of them using the tax free benefits of the JISA.

However, many parents, around half in fact, are choosing to put money for their children into cash savings accounts with their bank or building society.

With interest rates likely to remain at an all-time low for the foreseeable future and with the Bank of England, growth on cash savings is currently, at best, unexciting.

This is why parents should at least consider a long-term investment strategy that includes stocks and shares JISAs.  While it’s true your capital is guaranteed with cash, stocks and shares JISAs offer the potential for greater growth over the long term – potentially for an investment period as much as 18 years.

Stocks and shares investments can of course go down as well as up and the original investment is not guaranteed, but over a long investment period you are giving your money the chance to ride out the volatility of the stock market.

A JISA ‘birthday present’

Parents are set to benefit yet further from JISAs. The Government has announced that from April next year JISAs will be able to accept transfers from Child Trust Funds (CTF).

Scottish Friendly’s research shows one in eight parents have already decided that they will be moving from a CTF to a JISA when the time comes and we expect many more to follow.

Junior ISAs essentially create a living trust fund for your child, giving them a head start as they enter adulthood. These investments create an opportunity upon their maturity, to offer your children a real head-start in life.

Whatever they use it, be it paying off university fees, towards a deposit on a first property or even to travel the world, the JISA offers parents the opportunity to build an investment for their children and what parent doesn’t want to give their child that head-start into adult life?

Tax treatment depends on individual circumstances and tax law many change in the future.  Tax-free means the fund the plan invests in grows free of income and capital gains tax (other than tax on dividends from UK shares).

* Research conducted by OnePoll Research.  2,000 parents in the UK were surveyed in October 2014

No advice has been provided by Scottish Friendly. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting Advisers may charge for providing such advice and should confirm any cost beforehand.