Where should my daughter invest her £30k Junior Isa when she goes to uni?

I have been deeply interested in personal finance for many years and regularly invest in Isas and Sipps (self-invested personal pensions) for my wife and me, as well as Junior Isas for our three daughters.

Our eldest daughter will be 18 in June and currently has just over £30,000 in her Junior Isa. She is going to college in September and plans to use the money for her living expenses. She is still applying for student loans, but will only get the minimum maintenance loan due to the parents’ income.

I was wondering if you could possibly offer any advice on what she would like to invest her money in once she turns 18 and the Junior Isa disappears ie what kind of products/packaging and types of funds etc.

I understand that the Junior Isa will turn into an adult Isa. I am aware that during her studies she will not be able to supplement her savings, but she will receive a regular dividend from a limited liability company, in which I have an investment property and in which she, her sisters, my wife and I its shareholders. The dividend payments she will receive could be around £3,000 a year.

What should my daughter think about investing the money in her Junior Isa when she turns 18?

Angharad Carrick, from This Is Money, replies: It’s great news that you’ve been thinking about your and your family’s personal finances, and even better that you’ve set aside money for your daughters.

Junior Isa’s are a great vehicle to invest in when your kids are young because you can build a pot that is protected from tax either through a cash Junior Isa or stock and shares Junior Isa like your daughter has.

Once she is 18, your daughter’s Junior Isa can become a normal Isa.

You say that your daughter wants to use the money for her living expenses. While she may not want to take out a bigger student loan right now, it might be worth considering and prudent to use the Junior Isa money for her future, especially if she wants to own a home at some point.

Jason Hollands, Managing Director at Bestinvest says: One of the main reasons parents choose Junior Isas (Jisa) for their children is to give them an asset that can be used to help fund the future cost of a degree.

But there may be good reasons to stay invested rather than relying on the Junior Isa if there are other forms of funding available to the university such as taking out student loans, working part time/during holidays or continued support from the Bank or Mum & Papa, or help from grandparents.

Instead, the money or investment collected in the Jisa could be used for one of the biggest challenges young adults face: escaping a rental and getting on the first rung of the housing ladder.

It is important to point out that a Jisa does not disappear when the child turns 18, so the beneficiary will not be forced to take a piece of money unless she asks to cash her account.

At the age of 18, the Junior Isa is effectively converted into an adult Isa and therefore savings and investments can remain invested in it, with all income or profits growing tax-free.

The difference is that from the age of 18, if desired, the assets can be withdrawn drop by drop – or in full – to cover course fees or living expenses, for example. Full control of the account now rests with the beneficiary, who can do whatever they want with the assets.

One option your daughter might consider is to recycle a portion of the money currently in her Junior Isa each year into a Lifetime Isa or “Lisa.”

Lisa’s are a type of Isa specially designed for younger people (18-39 years old), to help them with two major life goals: buying their first home or saving for retirement.

Unlike other types of Isa, Lisa’s offer an upfront boost from the government in the form of a 25 percent supplement.

In a nutshell, young adults can subscribe to a Lisa for up to £4,000 per tax year and receive a maximum top-up of £1,000 from the government.

This can then possibly be used for the same investments that were previously in the Junior Isa, or for new choices, but with an instant boost from the government’s ‘free money’.

This kind of recycling from Jisa to Lisa may seem like a good idea, but it’s important to highlight that there are some conditions attached to Lisa’s.

The first property that can be bought using Lisa money should not be worth more than £450,000, which could be a problem for anyone looking to buy a flat in London.

Second, if they don’t use their Lisa for buying their first home, it will only be accessible without penalty at age 60. Withdrawals for any other reason may result in a 25 percent levy from the government as a recovery of the bonus received. .

Nevertheless, if your daughter can work her way through college, through loans, the expected dividends on her share of the family investment company, part-time income, or other sources, this recycle idea could prove very valuable in the long run. are – reducing the time she ends up putting rental income into someone else’s pocket and instead gets an interest in a home of her own.

Angharad Carrick adds: Our best DIY investment platform roundup will help your daughter understand their costs and which one is best for her.

She then has to decide what she wants to invest in. With so many funds and mutual funds across a number of industries and regions, things can get confusing, so she may want to opt for a simple global tracker fund that invests around the world. scholarships at low cost.

This is Money’s list of 50 best fund ideas, compiled from experts’ top picks for different types of investors, which can provide ideas for funds, mutual funds, trackers, and ETFs.

You can pay a professional to invest for your daughter, but the cost can be costly. If you want to do this, our financial planner find service can help you.

She could use an automated service, involving an online asset manager or robo-advisor, that provides tools to establish investment goals and risk levels that will be used to build a portfolio that they manage.

You pay a bit for this, but you will easily get hands-off investing in return with some expert help. Read our review of the most important robo-advisors here.

Some links in this article may be affiliate links. If you click on it, we may earn a small commission. That helps us fund This Is Money and use it for free. We do not write articles to promote products. We do not allow any commercial relationship to compromise our editorial independence.