I know a few people who set up Junior ISAs soon after they had a child.

In some ways this is obviously great, they’re planning for their child’s future and starting early (to probably benefit from compounding).

The allowance in the UK is £4,368 for the tax year 2019-2020 and the child’s legal guardian or parent must set it up on their behalf.

But here’s the important bit…

Money in the account belongs to the child, but they can’t withdraw it until they turn 18 (apart from in exceptional circumstances).

Now let’s make some assumptions that you earn 5% per annum on the ISA investment pot, and the government kindly increases the £4,368 allowance by 5% each year.

By my calculation this means they will have just over £140,000 coming their way on their 18th birthday, if you started it when they were born.

If that much money had landed in my account on my 18th birthday I know exactly what I would have done with the majority of it:

1. Bought a new car (a fancy, sporty one).

2. Gone travelling for a year champagne backpacking stylie.

3. Paid for various nights out/sporting matches etc for me and my mates.

Which probably wouldn’t have left much for university (I would have taken out a loan to cover that expense), or to put down a deposit on a house.

Both of which are likely what the well-intentioned parents wanted, but are less likely to happen than the contents of my list.

So you won’t find me setting up a Junior ISA for either of my kids. What I will do however is give them a bunch of reading to do during their teenage years.

Most of the books are contained within my reading list, an updated version of which will be added to the Free Resources area of my website soon.

I will ensure they have good financial literacy and money management skills, and will teach them the difference between assets and liabilities.

I will also show them the difference between asset-backed and non-asset-backed investments – and how to ensure their investments are as uncorrelated and diversified as possible.

Quite simply, I will make sure they read all the guides and products I’ve produced for my Guerrilla Investors community (alongside reading some key books by others).

So instead of a £140,000 cash injection they will be able to manage, control, and grow their own personal wealth, long after I’ve departed this world.

This will lead to time and geographical freedom, I couldn’t wish for anything better for them.

If any of this resonates, here’s a good starting point:


All the best,

Stephen Wallis

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