Two in five JISA holders invest more than they withdraw

Almost two in five (39%) 18-year-olds with a matured junior ISA (JISA) have put more money in than they took out within the first month of accessing the account, interactive investor has revealed.

The firm said this dispels fears among parents that they will "squander the money".

Analysis of interactive investor JISA accounts which matured when the account holders turned 18, which is the point they are converted to an adult ISA, showed that 39% of 18-year-olds contributed an average of £1,193 to the account within the first month of gaining access to the funds.

interactive investor said this figure is net of any withdrawals made.

Furthermore, this is more than the 31% of new adults who made withdrawals, net of contributions, averaging £512, from the JISA within the first month.

This equates to 2.5% of the average value of an interactive investor JISA of £20,202 at maturity.

Meanwhile, 30% made no withdrawals or contributions to their JISA over the period, with the percentage of 18-year-olds who left their JISA funds untouched falls to 12% after a year having of having access to the account.

Senior personal finance analyst at interactive investor, Myron Jobson, said: "Our data shows that fears held by some parents of their child squandering the cash they’ve amassed to give them a financial leg up when they reach adulthood through diligent investing and saving are perhaps overblown – although there will always be exceptions.

"Far from splashing the cash, the largest percentage of our 18-year-old customers with a matured JISA have chosen to make further contributions to the pot – a sign that they are putting what they’ve learnt about investing in their formative years into practice. The additional cash might have come from monetary gifts from family members, inheritance or even saved up pocket money.

"Some have opted to take a bit off the top of their JISA funds, which may have been used to help fund the cost of expenditure like the living costs at university. However, equally, the funds may have been used to fund a holiday – which isn’t necessarily the wrong decision as spending decisions are often a balance between essential and quality of life expenditure."

Over the 12-month period, 46% of those with accounts contributed an average of £7,012 in net of withdrawals. A further 42% made withdrawals net of contributions averaging £6,728.

The split between contributions and withdrawals remains largely unchanged after two years, but the values increase, mainly because they factor in contributions and withdrawals made in year one.

The average net withdrawal made across two years is £9,798, which is slightly higher than the average net contribution made over the period (£9,442).

Jobson added: "The moral of the story is children may be more responsible than perhaps parents give them credit for. The adult child might have an emotional attachment to the funds held in their JISA, viewing them as a symbol of a hard work which makes them reluctant to spend the money.

"Whatever the reason, the importance of financial education can’t be understated. Teaching children about money before they gain access to their JISA sets a solid foundation for their financial future, equipping them with essential skills and knowledge to make sound financial decisions throughout their lives."

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