BondsAug 15 2017

NS&I launches Junior Isa product

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NS&I launches Junior Isa product

National Savings and Investments (NS&I) has launched a bond available to Junior Isa clients paying a variable interest rate starting at 2 per cent.

The Junior Isa allowance for the 2017/18 tax year is £4,128, so this is the maximum investment in the bond this year but the minimum investment is £1.

The bond runs until the child is 18 and the interest rate is variable, but the rate is set by NS&I.

No withdrawals are permitted from a this NS&I bond before the age of 18.

Jill Walters, acting retail director at NS&I, said: “More money is now deposited with NS&I online than any other individual sales channel and our Junior Isa offers parents a simple and modern account for their children’s savings.

"This tax-free account will allow £4,128 to be invested, over this tax year for children aged under 18 with NS&I’s 100 per cent capital guarantee.

“Our new Junior Isa will also allow third-parties to deposit into the product electronically, which means that grandparents and other relatives and friends of the child or family can add additional funds once the account has been opened.”

The capital invested in products offered by NS&I is protected by a UK government guarantee.

The yield on a UK 10-year government bond, which is also an investment backed by the UK government, is currently less than 1.1 per cent, compared to the 2 per cent interest rate the bond is offering.

Investments held in a Child Trust Fund, can be transferred into the new Junior Isa. Child Trust funds are no longer offered by most providers.

David Henderson, an adviser at Personal Money Management in Edinburgh, said “very few” of his clients tend to use NS&I products in their portfolios.

Of this latest offer he said : “If you are setting up as Junior Isa and are completely risk averse, then this is obviously a very good deal. But usually, because Junior Isas are held for the long-term, taking a bit more risk is acceptable for most investors.”