Rural communities embrace Junior ISAs – number opened increases nearly 10% with average amount invested almost £3,000

Rural communities are increasingly turning to Junior ISAs invested in stocks and shares as a tax-efficient way of protecting wealth and combatting inflation. The number of new stocks-and-shares Junior ISAs opened with leading rural insurer NFU Mutual increased by nearly 10% in 2021 compared to 2020, and the rural community are investing more than the national average too.

Last year, the average amount the insurer’s rural customer base invested into a Junior ISA was £2,980. According to the latest HMRC figures, the national average subscription to Stocks-and-Shares JISAs is £1,180. The number of one-off top-ups to stocks-and-shares JISAs from NFU Mutual’s rural base also rocketed by 86% in 2021 when compared to 2020 as family members used extra money saved in lockdown to invest in their children’s future.

David Nottingham, Personal Finance Expert at NFU Mutual, said: “More and more of our rural customer base are turning to Junior ISAs, with both parents and grandparents using them as a tax-efficient way to invest for a child’s future.

“Last year, many people were able to save money during the pandemic and were looking for the best way to invest it in an environment of low interest rates. With inflation raging this year and interest rates struggling to keep up, cash savings are going to be eroded over time but Junior ISAs invested in stocks and shares have the potential to counter inflation as they are invested for the long term.

“Locked away until the child turns 18, families can weather short-term stock market volatility and benefit from the potential of compound growth to maximise returns. The fact that the Junior ISA allowance more than doubled in 2020 to £9,000 created extra interest and has enabled families to shelter more from the taxman.”

You can pay a maximum of £9,000 into a child’s Junior ISA each tax year, but even putting away the average amount can lead to a substantial sum, suitable for university costs or a potential home deposit.

*Calculations assume 4% growth after fees, compounded monthly

Nearly 70% of all Junior ISAs are invested in cash, but over the long-term inflation erodes the buying power of those savings, particularly in a high inflationary period like 2021. Families have until Tuesday, April 5 to use their Junior ISA allowances for 2021/22.