Junior ISA investing should ideally focus on a very ‘long-term’ time frame and many investors should consider ‘higher risk funds’ according to James Bateman of Fidelity.
As children return to school, James Bateman of Fidelity Worldwide Investment sought to provide some tips for parents considering investing in a Junior ISA for their child:
“One of the great points of a Junior ISA is that it is intended to be a very long-term investment. It might seem scary for parents to think of their child as a grown-up, but one day they might need some extra cash for a deposit on their first home, or perhaps to help with their university fees. But because it is such a long term investment, many investors should consider higher risk funds – and in particular, generally equities over fixed income, since historically over long time periods the former have substantially outperformed the latter. However, as the expected date of sale of the Junior ISA approaches, or perhaps as the child approaches adulthood, it makes sense to progressively lower the risk in the ISA, perhaps by moving into bond funds to lock in gains made.”
Bateman also pointed that those with very high tolerance levels to risk may also wish to consider emerging market funds when investing in a Junior ISA.