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The top Junior ISA holders have pots worth more than three-quarters of a million pounds, the data reveals, with more than 50 JISA holders worth more than £500,000.
Some 370 Jisa holders have jackpots worth £200,000 or more and a further 280 have jackpots worth between £150,000 and £199,999, according to a Freedom of Information request made by RBC Brewin Dolphin.
Brewin Dolphin said a young investor could have earned more than £750,000 if they had earned an annualised return of 32 per cent, with total contributions of £63,436 over 17 years, giving total gains of £697,667.
Saving for a rainy day: Investing your child’s savings could give him or her a significantly larger fund when he or she turns 18.
To do so, parents would have had to open a Child Trust Fund and transfer savings to a Jisa when they were launched in 2011.
Rob Burgeman, investment manager at Brewin Dolphin, said: ‘Jisa’s annual allowance of £9,000 is less than half of its adult counterpart, which is why very few people imagined there could be schoolchildren sitting on jackpots worth £750,000 or more.
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Jisa accounts initially had an annual limit of £3,600, which was later increased to the current £9,000. These accounts allow parents to save money for their children tax-free, with the option to invest it through a Jisa stocks and shares account.
‘HMRC’s figures, however, underline the value of long-term planning and the power of compounding.
“And while not all families will have the means to raise £500,000 by the time their children start university, a more modest fund of £50-£100,000 will likely be within reach for many,” said Burgeman.
The number of children with Jisa boats worth more than £50,000 has doubled from 8,130 to 16,420 last year, while those with more than £100,000 have almost quadrupled from 540 to 1,910.
| Pot size | Investor figures |
|---|---|
| £0-£9,999.99 | 1,663,350 |
| £10,000-£19,999.99 | 132.630 |
| £20,000-£29,999.99 | 47.120 |
| £30,000-£39,999.99 | 22.690 |
| £40,000-£49,999.99 | 13.360 |
| £50,000-£59,999.99 | 6.610 |
| £60,000-£69,999.99 | 3.840 |
| £70,000-£79,999.99 | 2.200 |
| £80,000-£89,999.99 | 1.150 |
| £90,000-£99,999.99 | 710 |
| £100,000-£109,999.99 | 470 |
| £110,000-£119,999.99 | 290 |
| £120,000-£129,999.99 | 220 |
| £130,000-£139,999.99 | 160 |
| 140,000-£149,999.99 | 120 |
| £150,000-£199,999.99 | 280 |
| Over £200,000 | 370 |
| Over £500,000 | 50 |
| Source: RBC Brewin Dolphin | |
Burgeman added: ‘A more modest jackpot of £50,000 to £100,000 will likely be within reach of many.
‘From birth, a £50,000 pot could be built up before the child turns 18 with contributions of around £150 a month, assuming an annualised return of 5 per cent after charges.
‘If the contribution is increased to £300 a month, the junior ISA will see a windfall of around £100,000.’
However, the vast majority of Jisa holders have much less in their pots, with 1.6 million holding less than £10,000.
However, by using a stocks and securities JISA, parents can open the way to considerably more growth than those using a cash JISA, although of course they do come with more risk.
Under Brewin’s model, a Junior ISA cash saver with total contributions of £63,436 would only see their pot reach £66,000 over the same time period.
Burgeman said: ‘This type of accelerated growth simply cannot be generated through patient cash savings.
‘The lesson to be learned is that Jisa shares and stocks have rewarded investors with much better returns over the long term than Jisa cash.’
Children gain full control over Jisas when they turn 18, leading some parents to worry that their child is not mature enough to manage such a windfall. This can be especially the case for those who have funds running into the hundreds of thousands of pounds.
Rather than choosing an alternative vehicle to save for your child, such as a trust, it’s essential to make sure you understand what you need before accessing the money you’ve worked so hard to save.
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