Parents who put £25 a month into ISA could see kid earn £11k when they’re 18

A tax-free savings account could help parents put away almost £11,000 by the time their kid is 18.

There are almost one million Junior ISA accounts open in the UK but it means more are still missing out.

Parents will need to put £25 a month into the ISA to give their child almost £11,000 by the time they're 18.

The annual allowance was more than doubled last year to £9,000 which is the amount you can save tax-free each year.

As the tax year ends on April 5, you have just five days to open an account to make the most of this year's allowance.

When you open a JISA, the first decision you need to make is between a cash JISA or a stocks and shares JISA.

Over 70% of Junior ISAs opened are cash savings products.

People are often drawn to the cash option first as it's safer.

Your money is protected up to £85,000 and you know the interest rate is guaranteed.

While stocks and shares JISA can provide a bigger return, you are gambling with your cash.

But just remember an investment is always a risk as your money can go down.

Calculations by Hardgreaves Landsown show if you were putting £25 a month, you might earn 2.5% for 18 years, reports The Sun.

In total you could end up with £6,825 but with stocks and the shares ISA at 5%, the contribution could grow to £8,766.

But if that grew to an average of 7%, parents could earn their kid at least £10,831 in the pot.

Essentially if you could bump up your monthly payments to £35, the cash could build with investments growing at 7% to £15,163.

It's important to note that you can't withdraw cash from a Junior ISA account until your child turns 18.

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Also if you're considering a stocks and shares JISA, it's good to speak to a bank or building society for assistance first.

In other money news, the National Living Wage increased today for millions of Brits.

It was £8.72 an hour but rose by 19p to £8.91 from April 1 – which means workers get a 2.2% increase in their payslips.

The wage boost will also apply to 23 and 24-year-olds.

Chancellor Rishi Sunak confirmed the increase in his Budget after the new rate was revealed in the Spending Review in November.

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