ISAs vs JISAs – there’s no need to decide

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.

For anyone under the age of 15 it might come as quite a shock to know that there was a time when we didn’t have Sky+, TiVo, iPlayer, 4oD, Netflix or any of the range of methods available nowadays to watch TV when it suits you.

It might also come as a shock to anyone aged under 30 to know that there was a time when we didn’t have video recorders, so if there was a barney over who was watching what was on the TV you didn’t even have the option of catching up later. In our house it was Star Trek (the original series, because there is no other) on BBC2 or the News. Dad invariably won and I had to watch Star Trek.

Anyone aged under 40 might even recall that incredible period in our lives when there was only one TV in the house and a grand total of three channels to choose from. Yes, that’s right kids; we used to only have one TV in the whole house and if you missed your programme that was it: over, done, finished. Unless it was Dad’s Army because that was repeated every six weeks as far as I can recall!

Today of course TV is now a pull rather than push service. You watch what you want, when you want, wherever you want. Some people are nostalgic for those days when we as a nation all sat down together to watch TV at the same time but what do they know?  Let’s face it – it was awful!

This is the part where I now segue into finance and most people just switch off, but don’t touch that dial (a reference few people these days will get), because the issue of child savings sometimes seems to be analogue in a digital age.

Parents and grandparents seem to think you have to choose between a Junior ISA or an ISA when it comes to saving or investing for your child or children but these days you don’t. You can use them both together yet still have complete control.

Both are tax free (meaning free of capital gains tax and income tax except for taxes on UK dividends) and have generous limits. £15,000 for the ISA and £4,000 for the JISA from 1 July.  Remember that tax treatment depends on individual circumstances and can change in the future.

Unique to Scottish Friendly, both of these tax free accounts can be broken up into different pots. So your JISA can have a pot from Granny Smith, another from Grandad Jones, another from Uncle Joe and one called “University fees” from Mum and Dad.

Your ISA on the other hand can be split into different pots, one for yourself, one for a rainy day and another for each of your children.

All of these individual pots can be managed together by the parent through our My Plans service.

So from two accounts you can have a multitude of options crafted your way all managed with the click of a mouse. Of course no matter which account you use you could get back less than you pay in depending on which investment option you select and when you cash in your plan.

The great benefit of the different accounts though is that you can mix and match them to your needs. Using your ISA you as the parent or payer remain firmly in control on what happens with the money. It’s not locked up until the child turns 18 so can be used for a number of expenses such as fees, a first car, driving lessons etc. It also means that you can be sure that the money doesn’t end up getting blown on a huge party, because, let’s face it, that’s what we would have done with the money when we turned 18. It’s saving and investments with parental control!

The Junior ISA route is saving with parental control but from the other side of the fence! For example we know from experience and research that many grand parents want to save and invest for their grandchildren but want to be assured that their own children (the parents) cannot access the money. The Junior ISA is therefore customised to their needs as there is no access and the value automatically becomes the property of the child when they turn 18.

So when anyone asks me should I go for a JISA or an ISA for my kids’ savings, I just say we don’t have a single telly anymore; these days there’s no need to decide. Use both depending on what you want to do with the money. It’s not a question of which complex wrapper you should use it’s just a simple question: do you want parental controls over the money, or do you want controls over the parents?

Taking out an investment (also known as a stocks and shares) ISAs or JISA mean your original investment can go down as well as up and your or any children you invest on behalf of are not guaranteed to get back the amount originally invested.

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.