CPD  

Should you save in specific children's savings products?

He says: "Jisas can be helpful for accumulating a pot of assets to help provide the child with a financial boost at the start of adulthood - for example paying university fees."

However, he adds: "these are not appropriate for financing costs during their childhood years, as the funds cannot be accessed until the child is 18 years old, and then the assets are legally theirs."

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Ms Nelson adds: "Perhaps the biggest concern for parents is the fact that when the child turns 18 they have no say on how the money set aside is spent.”

According to Robin Baker, adviser for Eden School Fees Planning: "We normally avoid children-specific investments for school fees purposes.

"While these have their benefits, they lack the required flexibility to help pay school fees. Jisas can help with university costs, however, as parents who can save the full £4,080 a year will find over 18 years this could lead to a significant fund."

Mr McMurrich says if parents do opt for an Isa or a Jisa route, "a simple, straightforward, multi-asset risk-appropriate portfolio works well for Jisas.

"There may be several sources contributing and parents might not want to make decisions daily about the investments or react to ever-changing market conditions.

"It's the discipline of regular saving and the diversified asset exposure which will benefit the child when they hit 18."

Children’s savings

For those considering a less risky form of investment, with some flexibility, there are some savings accounts similar to adult savings accounts.

Some friendly societies still offer schemes where the initial £300 a year enjoys tax benefits. Many of these can be opened with only a few pounds, for those parents who may be a little cash-strapped in the short term. 

When opening a children’s account you will be asked to sign a R85 form so the child will receive gross interest without any tax deduction.

Ms Nelson comments: “As with adult savings accounts the best rates are often with a fixed term period; however you should assess whether the child would need access to the money to make sure they get the best account to suit them.

“It is always wise to shop around to see which account best suits your situation, parents should try not be enticed by any upfront gifts as these accounts often have lower returns."

Moneyfacts Best Buys - Children's Savings (22/09/16)

ProviderAccountGrossNotice/TermMin InvestmentInterest PaidRate Type
Halifax Kid's Regular Saver4.00%12 Month Bond£10On maturityFixed Rate
Saffron BSChildren's Regular Saver4.00%12 Month Bond£5On maturityFixed Rate
HSBCMySavings2.96%Instant£10MonthlyVariable Rate
National Savings & InvestmentsChildren's Bonds Issue 352.50%5 Year Bond£25Ann'sryFixed Rate
Harpenden BS18 Club2.45%Age 18£1½ YearlyVariable Rate

While some children’s accounts allow you the flexibility to dip in and out of the savings, however often the best accounts restrict access, which can be useful to allow long-term compounding to do its work.

There can be some restrictions, however, as Ms Nelson explains: "Restrictions can vary between the account being held in trust by an adult, to the parents having to authorise the withdrawals made and sometimes proving the withdrawals being made are for the benefit of the child.”