18-year-olds ‘aren’t plundering’ Junior ISAs, AJ Bell finds

Source: Trustnet

The majority of young investors continue saving after their Junior ISA matures with full cashing-out of the account proving rare, AJ Bell has found, challenging a widespread parental worry.

One of the most common concerns among parents opening a Junior ISA is that their child will spend the entire pot as soon as they gain control at 18. But the data suggests this fear is largely unfounded.

AJ Bell data covering 2023 to 2025 found a third of Junior ISA holders (33.1%) contributed to their adult ISA after their account matured. By contrast, fewer than one in 10 (8.9%) withdrew more than half of their savings within the first year of taking control.

Full cashing-out was the least common outcome. Just 6.5% of holders emptied their pot within the first year of gaining access to their money.

Laura Suter, director of personal finance at AJ Bell, said the figures should reassure parents who have held back from investing for their children.

“Kids aren’t plundering their ISA savings as soon as they get their hands on the money,” she said.

“Junior ISAs are one of the best tools for parents hoping to set their children up for later life through long-term investing, but the prospect of gifting children a large sum of money when they turn 18 can be daunting.”

Around one in five holders (19%) made some withdrawal within the first year, though not necessarily a substantial one. Suter said a blended approach is likely common among this group.

“Many 18-year-olds are far more likely to adopt a combined approach, perhaps withdrawing some money to fund travel, further education or other spending plans, but keeping the rest invested for the future,” she said.

Junior ISAs allow annual contributions of up to £9,000 from parents, grandparents, friends and family. The account converts to an adult ISA at 18, at which point the holder gains full control.

“This data proves that these concerns shouldn’t deter parents and grandparents from sticking a bit of money aside for their kids or grandkids,” Suter said.

“Even investing a small amount regularly, or a one-off modest lump sum when the child is young, could see that money flourish over the years.”

Putting away £500 a year for a child from birth could produce a portfolio worth almost £15,000 by age 18, based on a 5% annual investment return after charges, according to AJ Bell.

A one-off £1,000 lump sum invested at birth could more than double over the same period, reaching £2,407 on the same assumptions.

“The key thing for parents thinking of investing for their children to remember is that the sooner they start, the better, even if they can only afford a small amount of money,” Suter said.

“Grandparents, friends and family could also get involved and send money to a child’s Junior ISA up to the £9,000 annual allowance, meaning it doesn’t have to be seen as a solo project for parents.”