Where should my daughter invest her £30k Junior Isa when she goes to uni?

I have been very interested in personal finance for many years now and regularly invest in Isas and Sipps (self-invested personal pensions) for my wife and I as well as Junior Isas for our three daughters. 

Our eldest daughter turns 18 in June and currently has just over £30,000 in her Junior Isa. She will be going to university in September and intends to use the money towards her living expenses. She is still applying for student loans but will only receive the minimum maintenance loan due to parents income.

I wondered if you may be able to provide any advice as to what she may consider investing her money in once she turns 18 and the Junior Isa disappears i.e. what type of products/wrappers as well as types of funds etc.

I understand that the Junior Isa will turn into an adult Isa. I’m conscious that she won’t be in a position to add to her savings whilst studying, however, she will receive a regular dividend from a limited company, which I hold an investment property in and which she, her sisters, my wife and I are shareholders in. The dividend payments she will receive may be around £3,000 per year.

Where should my daughter think about investing the cash in her Junior Isa once she turns 18? 

Angharad Carrick, of This Is Money, replies: It’s great news that you’ve been thinking about your and your family’s personal finances, and even better that you have put money aside for your daughters.

Junior Isas are a great vehicle to invest in when your children are young because you can build a pot which is shielded from tax, either through a cash Junior Isa or a stocks and shares Junior Isa, as your daughter has.

Once she reaches 18, your daughter’s Junior Isa could become a normal stocks and shares Isa.

You say that your daughter wants to use the money for her living expenses. While she might not want to take out a bigger student loan at this point, it might be worth considering and wise to use the Junior Isa money towards her future, particularly if she wants to own her own home at any point.

Jason Hollands, managing director at Bestinvest says: One of the main reasons parents choose Junior Isas (Jisa) for their children is to provide them with a pot of assets that can be used to help fund the future costs of a degree.

But there can be good reasons to remain invested rather than draw down on the Junior Isa if other forms of financing are available for college, such as taking out student loans, working part time / during holidays, or continued support from the Bank of Mum & Dad, or help from grandparents.

Instead, the money or investments accumulated in the Jisa could then be used towards one of the biggest challenges faced by young adults: escaping rental accommodation and getting on the first rung of the housing ladder.

It is important to point out that a Jisa doesn’t disappear when the child gets to 18, so the beneficiary won’t be forced into taking a chunk of cash, unless she requests to cash-in her account. 

At 18, the Junior Isa effectively converts into an adult Isa and therefore savings and investments within it can continue to remain invested, with any income or gains growing tax-free. 

The difference is that from age 18 the assets can be withdrawn, if required, in drips and drabs – or entirely – for example to help meet course fees or living costs. Full control over the account now sits with the beneficiary, who can do as they like with the assets.

One option your daughter might consider is to recycle some of the money currently in her Junior Isa each year into a Lifetime Isa or ‘Lisa’. 

Lisas are a type of Isa specifically designed for younger people (aged 18-39), to help them with two important life goals: buying their first home or saving for retirement. 

Unlike other types of Isa, Lisas provide an upfront boost from the Government in the form of a 25 per cent top up. 

In a nutshell, young adults can subscribe up to £4,000 each tax year in a Lisa and receive a maximum top-up of £1,000 from the Government. 

This could then potentially be ploughed into the same investments previously held in the Junior Isa, or new choices, but with an instant boost from the ‘free money’ from the Government.

This type of recycling from Jisa to Lisa may seem a no brainer, but it is important to flag that there are some strings attached with Lisas. 

The first property that can be purchased with the help of any Lisa money must not be worth more than £450,000 in value, which could be an issue for anyone hoping to buy a flat in London.

Secondly, if they don’t use their Lisa for buying their first home, it can only be accessed without penalty at age 60. Withdrawals for any other reason will potentially incur a 25 per cent charge from the government as a clawback of the bonus received.

Nevertheless, if your daughter can manage her way through universiy, through loans, the expected dividends on her share of the family investment company, part-time earnings or other sources, this recycling idea could prove very valuable over the long-term – reducing the time she might end up putting rental income into someone else’s pocket and instead getting a stake in a property of her own.

Angharad Carrick adds: Our best DIY investing platform round-up will help your daughter understand their charges and which may be best for her.

She then has to decide what to invest in. With so many funds and investment trusts on offer across a number of sectors and regions, it can become confusing, so she may want to opt for a simple global tracker fund that invests across the whole world’s stock markets at a low cost.

This is Money’s 50 best fund ideas list collated from experts’ top picks for different types of investor could help, providing ideas for funds, investment trusts, trackers and ETFs.

You can pay a professional to invest for your daughter but the fees might prove costly. If you want to do this our find a financial planner service can help.

She could use an automated service, which involves an online wealth manager, or robo-adviser, which offer tools to establish investment goals and risk levels which will be used to build a portfolio that they manage.

You pay a bit for this, but in return you get easy hands-off investing with some expert help. Read our review of the main robo-advisers here.

This post first appeared on Dailymail.co.uk