Key facts
- A grandson turning 18 can contribute to both a Junior ISA and an adult ISA in the same tax year.
- The total allowable investment in this scenario is £29,000.
- This is achieved by contributing up to £9,000 to a Junior ISA before the 18th birthday and then £20,000 to an adult ISA.
- For long-term savings, a low-cost global stock market tracker fund is recommended.
- Consider funds that include emerging markets and smaller companies for potentially higher rewards, alongside global trackers.
Fidelity personal financial specialist Marianna Hunt addressed a reader's query about maximizing ISA contributions for their grandson. The reader asked if it was possible to contribute to both a Junior ISA and an adult ISA in the same tax year, especially as their grandson was turning 18. Hunt confirmed that this is indeed possible due to a quirk in ISA rules. The grandson could contribute up to £9,000 to a Junior ISA before his 18th birthday and then utilize the full £20,000 adult ISA allowance afterward, totaling £29,000 for the tax year. This significant sum offers a strong start for long-term savings. Regarding investment strategy, Hunt suggested that for a time horizon of five to 10 years or more, a simple, low-cost fund that passively tracks global stock markets is often the most straightforward approach. She noted that indices like the FTSE Global All Cap include smaller companies and emerging markets, which carry higher risk but potentially higher rewards, unlike the MSCI World index. Investors can choose global tracker funds that incorporate these elements or opt for specialized funds focusing on emerging markets or smaller companies, either through passive tracking or active management. Hunt also mentioned the Fidelity Select 50 list, which includes funds like the Lazard Emerging Markets Fund and the Fidelity Asian Smaller Companies Fund. Regular portfolio reviews were advised to ensure alignment with goals and time horizon.