When my eldest was a newborn, a cheque arrived in the post. It was addressed to her. Someone wanted us to open a Junior ISA — or even a Junior SIPP, though I wouldn't learn about that one for years.
I was in the thick of cluster feeding, running on no sleep, and barely remembering my own name — and someone had handed me not only a physical cheque but one made out to a baby who didn't even have a passport yet. I remember staring at it, completely baffled, slightly resentful of whoever thought this was an appropriate time to be financially responsible.
Their intention, of course, was that we open a Junior ISA and put it straight in. Which was a lovely thought. A thought that required a functioning brain, which I did not have.
Once paternity leave was over, my husband took it on. And so Annabel had a bank account before she had any teeth. A stocks and shares Junior ISA, to be specific — not a cash one, which matters more than most people realise.
What I didn't understand then
We started putting a small amount in each month, automated so we'd never forget. That part we got right. What I didn't fully appreciate was what we'd actually built — a stocks and shares Junior ISA is a tax-free investment that compounds quietly in the background for 18 years, completely untouched. And I'd never even heard of a Junior SIPP at that point, which is a whole other story.
By the time my second daughter came along I understood it better, but I was even more sleep-deprived, so her account took even longer to set up. (This is apparently just how it goes.)
Then last summer, I actually sat down and looked properly at the fees on both accounts. Moved them both to Interactive Investor, which I'd researched and was happy with on both fees and fund choice. Should have done it sooner, but better late than never.
The two accounts every parent should know about
There are two powerful, tax-efficient ways to invest for your children. They work differently and serve different purposes — but both use the same quiet force: compound growth over time.
| Junior ISA | Junior SIPP | |
| What it is | Tax-free investment your child accesses at 18 | A pension started at birth |
| Annual allowance | £9,000 | £2,880 (gov adds 20% = £3,600) |
| Access age | 18 | 57 (currently — may rise) |
| Best for | House deposit, uni, life launch | Long-term retirement wealth |
| Where I use | Interactive Investor | Fidelity, AJ Bell |
What the numbers actually look like for a stocks and shares Junior ISA
Assuming 7% average annual growth — a realistic long-term stock market return after fees — here's what a Junior ISA could be worth at 18:
That's all completely tax-free. Put in £50 a month from birth and by 18 your child has £21,000 — roughly half of it growth the market handed you for free.
The Junior SIPP numbers are even more striking because of the time horizon involved. £25 a month from birth, with the government adding 20% tax relief, could be worth around £147,000 by retirement age — with no additional contributions after 18. The pot just keeps compounding for another 39 years.
The cost of waiting
This is the bit that genuinely surprised me when I ran the numbers properly.
Start at birth with £50/month: your child has ~£21,000 at 18.
Wait until they're 6: they have ~£11,000.
Same contributions over a shorter period, but you lose nearly £10,000 in growth. That's not a rounding error — that's potentially the difference between a house deposit and not having one.
A word on fees
When I reviewed both girls' accounts last summer, fees were the main thing I was looking at. Over 18 years, even a 0.5% difference in annual fees compounds into thousands of pounds less in the final pot.
Look for: a low platform fee, a low OCF on the fund itself (global equity index funds are typically 0.06–0.22%), and free or low dealing charges. That combination matters more than almost any other decision you'll make.
Interactive Investor charges a flat monthly fee rather than a percentage, which works well once the pot grows — your fee doesn't scale up with the value of the account.
The free guide
I wrote a detailed guide to both accounts — the numbers, the setup steps, provider comparisons, and the ChatGPT prompts I use to compare fees quickly. It covers everything I wish someone had handed me when that cheque arrived.
Download the free Junior ISA & SIPP guide — pop your email in below and it comes straight to you.
Also on Femme Finance:
- How compound interest works — and why starting now matters
- How to maximise your pension savings
- SIPPs explained: how does a SIPP work?
This post is for informational purposes only and does not constitute financial advice. Investments can go down as well as up. The 7% growth rate used is a long-term average illustration, not a guarantee. Tax rules and access ages may change. Some links are affiliate links — I may earn a small reward if you sign up, at no cost to you. For personalised advice, speak to a regulated financial adviser via Unbiased.
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