Meet Britain’s rich kids: the biggest Junior Isas

Diligent saving can set children up for life. Jessica Beard asks the parents for their advice

Britain’s richest children have nearly £140,000 each tucked away in Junior Isas, waiting for them to reach adulthood. The annual limit for saving into a Junior Isa is £9,000. However, some parents have managed to grow their funds by tens of thousands of pounds before their child even turns 18. The 100 largest Junior Isas held with Interactive Investor, a stockbroker, have an average worth of £137,114.

Small amounts invested regularly can make a big difference over time. Putting away just £50 each month over 18 years would grow into £17,533, assuming 5pc yearly returns.

Scottish Mortgage, the tech-heavy investment trust, was the most common investment held in Interactive Investor’s Junior Isas, followed by Fundsmith Equity. The Vanguard Lifestrategy 80pc Equity and 100pc Equity funds, as well as the Baillie Gifford Positive Change fund, rounded out the five most popular funds.

One father who started putting money aside early is Sam Chatterton Dickson, 54, from London. He began investing into a Junior Isa when his son, George, was three years old. Now nine, George has more than £16,700 tucked away in investments, with £400 added to the sum each month.

The diligent dad said he started his own Isa in his mid to late-20s and placed importance on maximising tax advantages.

When it comes to his investment strategy for his son, he has built up exposure to different funds one at a time. The first three years were spent investing into Scottish Mortgage, and his £8,000 investments have since grown to £14,000. He stopped paying into it in mid-2020 and started investing in Rathbone Global Opportunities, which now holds £1,500. He has since moved on to the HSBC MSCI World ETF tracker, investing £1,000 so far.

“George knows he has a pot of money building up. I don’t tell him too much about how much it’s worth because I don’t want it to go to his head,” he said.

‘I don’t want him to blow it all on fast cars and fine wines’ Sam Chatterton Dickson, 54, and son, George, nine

‘Don’t wait until they turn 18 to involve them in the management’ Nigel Savage, 71, and grandson, Freddie, two

Mr Chatterton Dickson said he would not be overly prescriptive about how the money is eventually spent.

“I would like it to go to something that will stand the test of time, and I don’t want him to blow it all on fast cars and fine wines. When he turns 18, he is legally allowed to do what he wants. If he were to use it to pay off debt for university studies, his first home or investing in his own start-up, that would be fine,” he said.

Long-time investor Nigel Savage, 71, from Cheshire, has set up a Junior Isa for his two-year-old grandson, Freddie. He plans to keep contributing the maximum £9,000 a year.

Mr Savage, who is retired, said it was a valuable tool to teach children important lessons about money.

“It is a good way to educate kids about how the world works, and compound interest. Especially when they reach the ages of seven to nine, they can start to appreciate the value of savings,” he said. “You can’t start too early on that process. Don’t wait until they are approaching 18 before you start to engage with them on the management. Otherwise it might be too late and they will blow it.”

However, investment strategies differ between his own Isa and the Junior Isa. “I don’t invest in the same way. Particularly when someone is as young as two, you can take a longer view and a slightly more measured risk. I’m an amateur, but I have done pretty well over the years,” he said.

Mr Savage said investing was like following football teams. He tries to back good managers with a clear strategy and a successful track record, such as Nick Train of the Finsbury Growth & Income Trust.

The average parent saving into a stocks and shares Junior Isa put away £1,180 in the 2019-20 tax year, according to HM Revenue & Customs.

Myron Jobson, of Interactive Investor, said the need for long-term saving for children had “never been greater”, as the cost of university and house prices continued to rise. “History shows that even a middle-of-the-pack fund is likely to compare favourably with cash. You don’t need to be an expert stock picker to benefit,” he said.