As we grow older, we come to understand the importance of thinking about the future, both for our children and the environment.

At Sheffield Mutual, we have recently released our Sustainable Junior ISA, a new product designed to help families provide for their children’s future while promoting a sustainable approach to investing.

This new product will be an excellent ISA for grandchildren, children, and families to get involved in financial planning and help kickstart a savings strategy that could last a lifetime.

Throughout this article, we will explore the key features of this new ethical Junior ISA and address some frequently asked questions.

Help Your Child Learn About Sustainable Investing

Sustainable investing is a great way to help support the environment while also setting your children up for a prosperous financial future.

Our Sustainable Junior ISA has a variety of features that make it an excellent choice for investing for your children, including:

• Aligned with the UN’s Sustainable Development Goals

• Tax Efficient

• Medium To High Risk

• Flexible Contributions

Helping to Reach Sustainable Development Goals

One of the unique things about our Sustainable ISA and Junior ISA is that we have aligned these products with the values of the UN’s Sustainable Development Goals.

This list serves as a framework developed by the UN to promote peace and economic development by increasing the world’s access to essential resources, including clean water, quality education, good healthcare, and affordable energy.

The UN believes that by improving the quality of life for as many people as possible, we will be empowering them to provide for themselves and their communities.

In addition to aligning with the UN’s Sustainable Development Goals, the fund itself has been awarded the FCA’s Sustainable Mixed-Goals™ label. This means that the FCA has recognised that this fund’s investments support social growth and development, as well as a healthier environment.  

A Tax-Efficient Way To Save

Like all ISA products, our Sustainable Junior ISA is a tax-efficient way to save for the future.

As long as the contributions to the Junior ISA stay below the £9,000 contribution threshold, any profits, dividends, or bonuses earned on this account will remain tax-free.

Please note: Tax treatment depends on individual circumstances and is subject to change.

A Medium to High Risk Profile

Another feature that distinguishes our Sustainable Junior ISA from similar products is its risk profile.

Our Sustainable Junior ISA is a medium to high risk investment fund, which means the value of your investments may go up or down and you could get back less than you invested.

However, this instability can also be valuable; although this ISA may be less stable, it has the potential to offer higher returns than some other investments, like Cash ISAs that rely purely on interest.

In addition to the potential to capture more profit, our Sustainable Junior ISA is also what’s called a unit-linked product.

A unit-linked investment means that your money is invested in a single fund, which is then divided into units, with each unit representing an equal share of the fund.

The value of each unit depends on the value of the underlying investments made by the fund, which means the fund is free to invest in a range of diverse products without our members having to make individual investment choices.

Flexible Contributions

Another attractive feature of our Sustainable Junior Investment ISA, especially for parents and grandparents, is its flexibility. 

Contributions to this Junior ISA are not commitments: they can be increased, decreased, paused, or stopped altogether, depending on your investment strategy or any changes to your circumstances. The money will remain invested until the recipient turns 18.

Another aspect of this flexibility comes from the contributions. Although the ISA must be set up by the person with parental responsibility for the child, once it has been created, it can be added to by any adult.

Grandparents, godparents, aunts, uncles, and family friends can all make direct contributions to this ISA, as long as the annual contribution limit is not breached.

Frequently Asked Questions

Who can open a Sustainable Junior ISA?

A Sustainable Junior ISA can only be opened on behalf of a child by their parent or guardian. Alternatively, a child can open a Sustainable Junior ISA themselves if they are over 16 but under 18.

Can I withdraw cash from a Sustainable Junior ISA?

Because our Junior ISAs have been designed as a long-term investment for a child’s future, funds cannot be withdrawn until the child turns 18, when they will have full access to the fund's value.

Can I convert a Sustainable Junior ISA to an Adult ISA?

Once a child reaches the age of 18, they will have the option to convert the value of their Junior ISA into an equivalent adult ISA. This will not affect their ISA allowance for that tax year.

Can I turn a Child Trust Fund into a Sustainable Junior ISA?

If your child already has a Child Trust Fund, you can convert this into a Junior ISA with Sheffield Mutual by filling out a transfer form.

However, it is essential to note that partial balance transfers are not allowed, meaning that the full amount must be converted into the new Junior ISA.

Discover A New Type of Investment For Your Children at Sheffield Mutual

At Sheffield Mutual, we continually seek new ways to assist our members in making informed financial decisions.

Our new Sustainable Junior ISA is an excellent option for grandchildren and children, offering a range of features and benefits that can help you make informed choices for your family.

Alternatively, if you want to invest for your children but feel like a Sustainable Junior ISA is not the right choice for your family, consider our Children’s Tax Exempt Savings Plan or our Children’s Regular Savings Plan.

If you are interested in discovering a new type of ethical Junior ISA, or you are considering becoming a member of Sheffield Mutual, please contact us on 01226 741 000 or by emailing enquiries@sheffieldmutual.com.

This blog provides generic information and the writer's opinions and should not be relied upon for investment decisions. Sheffield Mutual has provided no advice. If you doubt whether a savings or investment plan suits you, consider contacting a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk or www.vouchedfor.co.uk. Advisers may charge for providing such advice and should confirm any costs beforehand.