Investing for the future
The adage time in market rather than timing the market is particularly relevant when it comes to investing for children — the sooner you get started the more chance you have for compound interest to work its magic and turn your kiddies into millionaires (or pay their exorbitant university fees!). In this article we review the 5 best online investment services — usually referred to as platforms — for your little one’s Junior ISA (JISA). Be it your child, grandchild, niece or nephew, a JISA is a fantastic way to get them going.
What to look for?
Cost: most platforms will charge small fees for JISAs because of the nature of the accounts. This might be a flat fee like £25 or £50 per year, or a percentage of how much you have invested, such as 0.2% of £10,000 which would equate to £20. There may also be additional costs, depending on which investments you choose and if change your investment choice.
Investment choice and research: if you’re new to investing and a little unsure you might prefer a platform that has recommendations, or tools that you can use to research your chosen investments.
Accessibility: until the child reaches the age of 18 anyone can invest money into the ISA. Therefore, it might be important to pick a platform that allows you to easily set up payments from friends and family.
App-based: some platforms have a mobile app, while others are designed to be used on desktop. If you want to check and review the investments on the go then this is something to think about.
1. Fidelity Personal Investing
Fidelity is a renowned name in the world of platforms, so you can rest assured your money is in a good place. Fidelity’s DIY (do it yourself) platform is one of the cheapest on the market and doesn’t charge for Junior ISAs. However, you might be charged for trading in equities and funds at a minimum of £90 per year.
The platform is well equipped with a range of investments, top fund lists, model portfolios and guidance.
Based on an original investment of £5,000 and subsequent top-up investments of £1,000 per year (not invested in ETFs) the overall platform cost would be £0 per year.
The Vanguard platform is by one of the largest fund groups in the world. It is also one of the cheapest platforms on which to run a Junior ISA and costs start at around £15 per year.
The limitation of the platform is that you can only buy and sell Vanguard investments, so it does have a more limited investment range. However, there’s a good range of low-cost passive funds on offer to meet the needs of most investors.
Based on an original investment of £5,000 and subsequent top-up investments of £1,000 per year (not invested in ETFs) the overall platform cost would be £66.75 per year.
3. AJ Bell
AJ Bell is one of the best-known platforms in the market and offers clients a wide range of products and support.
The platform has a great range of investments, is low cost and has an annual fee of £25 for the Junior ISA. It also has a range of investment tools and favourite funds list to help those looking for some inspiration.
Based on an original investment of £5,000 and subsequent top-up investments of £1,000 per year (not invested in ETFs) the overall platform cost would be £111.05 per year.
Nutmeg offers robo-advice and is one of the longest standing providers of this type in the UK.
The platform offers four different investment styles, including a Socially Responsible option. The charge varies between style as some are regularly monitored and rebalanced, and others are just reviewed once a year.
Nutmeg is great for guidance and support with several videos and guides. They also have a live chat functionality as well as phone and email support.
Based on an original investment of £5,000 and subsequent top-up investments of £1,000 per year the overall platform cost would be £42.60 to £67.20 per year, depending on which investment style you choose.
5. Hargreaves Lansdown
Hargreaves Lansdown (HL) is one of the oldest and best-known DIY investment platforms in the UK. It is known for its stellar service.
HL is a great option for a Junior ISA. It will be more expensive than other platforms (depending on investment choice), but it comes with a huge range of investment research, guides and investment lists to help make investing easy and intuitive.
The experience and service offered from the platform is a great benefit especially to those that are new to investing.
Based on an original investment of £5,000 and subsequent top-up investments of £1,000 per year (not invested in ETFs) the overall platform cost would be £199.16 per year.
Helping a child take their first step in savings is one of the greatest gifts you can offer. So, take a look at our different calculators today. The simple one if you’re not sure where to start, the more detailed calculator one for the number junkies, and the robo one — start investing today!