What happens to a Junior ISA when you turn 18?

Your Junior ISA (Individual Savings Account) matures on your 18^th birthday – this means, from this day you can access the funds in your plan. If you don’t want to take your money out at this point and you’d rather continue investing it in an adult savings or investment plan, this is also an option as you can simply request for the money to be transferred into a Stocks and Shares ISA.  

Our expert guide takes an in-depth look at how your Junior ISA works before and after you turn 18. 

• Before you turn 18
• Take small steps to financial responsibility when you turn 16
• When you turn 18
• Maturity of Junior ISAs
• A big step in your financial future
• Important things to consider

Before you turn 18

Your parent or legal guardian can open a Junior ISA for you during your childhood, which they manage until you are old enough to do so yourself. Whilst this person may have control over the plan, they cannot access the money and do not own it once it has been deposited. Your Junior ISA can be opened from the day you’re born and anyone can add to the plan, whether they’re relatives or family friends.  

You are entitled to all the money in your Junior ISA when you’re old enough to fully access the funds. You can only take the money out of your Shepherds Friendly Junior ISA when you’re 18 years old but from the age of 16, you can take over management of the plan from your parent or legal guardian if you want to.  

Take small steps to financial responsibility when you turn 16

From age 16, you can register to manage your Junior ISA if you choose to. You will take over from your parent or guardian and become the main contact if we need to get in touch regarding your plan. then we will reach out to you directly, instead of the original person who opened it. This can be a good way to start taking responsibility of your finances. However, whilst you can manage your plan from 16, you cannot take money out until you reach the age of 18.  

Whilst it may seem like a lot to take on at the age of 16, if you need support from adults on how your Junior ISA works, then we’d encourage you to ask any questions you might have. If you know someone with experience in savings or investment plans that can teach you how to save, it could be really useful to speak to them at this stage. 

You can also open your own Junior ISA at 16 if you don’t currently have one. The same rules apply and you can save in the plan up until you’re 18, which is also when you can withdraw savings.

The day arrives – turning 18

Happy 18^th birthday! Now that you’re officially an adult in the eyes of the law, you can access the money in your Junior ISA. That isn’t to say you should rush to spend it all straight away. It’s important to consider what you want to do with your money as it can go towards special opportunities, life goals or your future. For example, these funds could help you to get a head start with any savings goals you may have, such as money for a holiday or your education. If you have any questions on how to proceed, then get in touch with us at Shepherds Friendly. We have plenty of experience when it comes to guiding people through the world of investing.

A note for parents: One way to get top-ups for your child’s ISA on special occasions is through relatives or family friends making contributions to their investment pot. Gifting money to children is a great way to build up your child’s nest egg throughout the years. 

Maturity of Junior ISAs

The term ‘when your Junior ISA matures’ essentially means when your savings or investment plan’s term comes to an end, which will be on your 18^th birthday. If you have a Shepherds Friendly Junior ISA, we’ll be in contact with you about your options and get confirmation on your next steps. You have a few different options, but the most common is either withdrawing the money from your plan or reinvesting it into an adult Stocks & Shares ISA. We will speak to you about what you’d like to do and take it from there.

Option 1 – Withdraw cash

As you’re now 18, you have full financial freedom to withdraw the cash from your Junior ISA. This is a great option if you want to put money towards a large purchase such as your first car, traveling, or your first home. Alternatively, you can put your money towards living costs and hobbies. However, we would recommend that you put thought into what you do purchase with this, as it’s a great opportunity for your future.

Assuming your plan is up-to-date, and we have your current date bank details, we will pay out the money in your plan once it’s matured, unless you’ve told us you want to reinvest your funds into a Stocks and Shares ISA. 

Option 2 – Reinvest into an adult ISA

If you aren’t sure what to spend your money on, or you simply don’t feel the need to withdraw it when you turn 18, your other option is to reinvest the money into an adult Stocks and Shares ISA. This can give you extra time to think about how you want to spend your money when the time comes, and it gives your fund a chance to grow over time.  

There are different plans out there for you to consider, but a popular choice is a Stocks and Shares ISA, which works in a similar way to the Junior ISA and is easy to transfer to with Shepherds Friendly. There is no charge involved with reinvesting your money into a new Stocks and Shares ISA with us. You can set up Direct Debit contributions to add to your plan automatically, which start from £30 monthly. Alternatively, you can deposit lump sum amounts as and when you like. Find out more information about our Stocks and Shares ISA on Shepherds Friendly Resources.

Option 3 – Withdraw some cash and reinvest the rest

If you can’t decide between withdrawing or reinvesting your savings, there is a third option to withdraw part of the balance and reinvest the remainder. This might be a good balance for those who would still like to enjoy some of the financial freedom of cash, whilst also thinking ahead for the future.

You could also keep your account as an adult ISA and choose your own investments. Alternatively, you could speak to a financial adviser to find the best solution for your needs.

Reinvesting your Junior ISA

When you turn 18, your Junior ISA automatically matures into an adult ISA. You can continue to manage the investment and enjoy tax-free growth.

Here are a few options for reinvesting your Junior ISA:

Stocks and Shares ISA

This allows you to invest in a wide range of assets, such as individual company shares, funds, gilts and bonds.

Pros: Potential for higher returns over the long term.

Cons: Investments can go down as well as up, so there’s a risk of losing money.

Cash ISA

This is a tax-efficient savings account that offers a fixed or variable interest rate.

Pros: Your money is safe and secure, and you’ll earn a guaranteed return.

Cons: The interest rates on cash ISAs are usually lower than the potential returns from stocks and shares.

Not sure? Read more about the differences between a cash ISA and stocks and shares ISA.

H3: Lifetime ISA

This is a government scheme that gives you a 25% bonus on your savings, up to £1,000 per year. You can use a Lifetime ISA to buy your first home or save for retirement.

Pros: The 25% government bonus is a handy boost to your savings, especially for first-time buyers. You can use it for retirement savings as well.

Cons: You can only withdraw the money to buy your first home (up to £450,000) or after age 60, otherwise you’ll pay a penalty. There’s also a limit on how much you can contribute each year (£4,000).

Compounding your earning

Reinvesting your Junior ISA can help compound your earnings over time. This means that your money will grow faster because you’re earning interest on the interest that you’ve already earned.

Risks to consider

It’s important to remember that all investments come with some level of risk. The value of your investments can go down as well as up, so you could get back less than you invested. It’s important to choose investments that are appropriate for your risk tolerance and investment goals.

If you’re not sure which reinvestment option is right for you, we can help. We offer a range of investment accounts to suit your needs, including Stocks and Shares ISAs.

How to access your Junior ISA

To access your Shepherds Friendly Junior ISA online, log in to your account. You’ll need your email address and account details to log in. Once logged in, you can view and manage your Junior ISA, make contributions, check your account balance and withdraw funds.

A big step into your financial future

Becoming an adult and starting to take control of your finances can seem daunting, but it’s also very empowering. You can weigh up your options and choose what to do with your money once your Junior ISA matures on your 18^th birthday. This can give you greater insight into money management and encourages you to think about your future. Whether you withdraw the money or reinvest it, you should always put careful research, time and consideration into your decision. There’s no right or wrong answer – if you are happy with your choice, that’s all that matters. 

Here at Shepherds Friendly, we have almost 200 years of experience helping our members plan for their financial future. Our Junior ISA was launched in 2011 and since then, we have paid an annual bonus into each member’s plan. As of January 2024, this changed to quarterly bonus payments. If you’d like more information about how we could help you on your investment journey, please reach out today.  

In summary

• Before you turn 18: Parents can manage the ISA until you’re 16, after which you can take over, but you’ll only be able to withdraw funds once you turn 18.
• When you turn 18: You gain full access to your Junior ISA when you turn 18. After this point you have a few options of what you can do with your funds.
  
  What to do with your funds
  
  
  • Withdraw: You can withdraw and use your funds for significant expenses, such as education or travel.
  • Reinvest: Transfer your JISA to an adult ISA or other savings account to allow further growth.
  • Partial withdrawal or reinvest: Split funds between immediate use and continued investment.
    
    Access and considerations
    
  • Manage your account using Shepherds Friendly’s mobile app.
  • Investment values may fluctuate, which means bonuses and tax benefits are not guaranteed.

Capital is at risk, so consider consulting a financial adviser before deciding.