Freetrade has announced plans to launch a commission-free Stocks and Shares Junior ISA (JISA), giving parents a new way to invest for their children’s future without account fees.
The investment app said the new Junior ISA will be available in the coming weeks across all Freetrade subscription plans and will allow parents or guardians to invest in more than 7,000 assets, including UK and international shares, ETFs, funds, bonds and UK Treasury Bills.
Junior stocks and shares ISAs allow parents to invest up to £9,000 per year for a child, with all growth and income sheltered from UK income tax and capital gains tax. Funds remain locked until the child turns 18, at which point the account converts into an adult ISA.
The launch comes shortly after Freetrade’s parent company, IG, introduced its own Junior ISA product, expanding the number of investment platforms offering tax-efficient investing accounts for children.
According to HMRC data, uptake of Stocks and Shares Junior ISAs remains relatively low. There are around 1.25 million Junior ISA accounts in the UK, but around 61% are held in cash, compared with just 39% invested in stocks and shares.
Freetrade argues that long-term investing could significantly increase the value of savings set aside for children.
Viktor Nebehaj, co-founder and CEO of Freetrade, said many parents default to cash savings despite the long investment horizon available in a Junior ISA.
“Playing it safe with cash may feel prudent, but when it comes to your children’s financial future it can mean sacrificing decades of investment growth,” he said.
Freetrade estimates that investing £88.25 per month, roughly the cost of a daily coffee, into a stocks and shares Junior ISA with a 10% annual return could build a pot of around £53,000 over 18 years. That is roughly equivalent to the average student debt faced by UK graduates.
By comparison, saving the same amount in cash, earning 2% annually would produce a pot of roughly £22,900 over the same period.
Freetrade currently serves more than 720,000 UK customers and manages around £3.3 billion in assets. The firm offers general investment accounts, ISAs and SIPPs, and the new Junior ISA is expected to further expand its family-focused investing options as competition grows among UK platforms targeting long-term savers.
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