Junior Isas: How to pick the best saving plan The main advantage of the Jisa over a regular child's savings account is that parents can contribute into this account without falling foul of the tax rules that limit the interest on gifts from parents to less than £100 per year. If each parent gives money to a child that generates more than £100 a year in interest, tax is paid at the parent's marginal rate. A Junior Isa is a way to earn tax-free interest if parents are close to that limit. Parents can choose a cash Junior Isa, a stocks and shares Junior Isa, or a combination of the two. A cash Junior Isa is a good choice for those who have less time before they will need to access the capital, as it is safer than stock market investments. It operates just like a normal savings account except the interest is tax-free. Cash Junior Isa interest ranges from 2pc, but customers can achieve up to three times as much so it's worthwhile shopping around, says Rachel Springall of Moneyfacts. She adds: "Halifax offer 6pc if the parent or guardian holds their own cash Isa, otherwise the best Junior Isa without restrictions comes from Coventry BS paying 3.25pc. As with any Isa, savers need to be aware that some come with introductory bonuses, and that the money cannot be touched until the child is 18, or if they fall terminally ill or pass away. Parents looking for a cash Junior Isa should look at the best-buy tables on websites such as moneyfacts.co.uk or savingschampion.co.uk. However, given the long-term nature of a Junior Isa, parents might also wish to consider a stocks and shares Junior Isa, which has the potential to deliver higher returns depending on the success of the investments. Wealth manager Philippa Gee said: "If your child has just been born and you have at least sixteen years to invest, you can usually afford to take a higher risk," she said. So consider the length of time the money will be invested, the fund and its charges. Ms Gee said: "There are lots of online resources but many investors prefer to take advice. Particularly as it is not just about what to invest in, but also when to review and sell a holding. Junior Isas permit the same type of investments as the Isa, including equities, bonds, unit trusts and gilts. A Junior Isa offers great flexibility in how often you top it up and how much you pay in, as long as the total amount doesn't exceed £3,600 each tax year. Ms Gee suggested that platforms such as Alliance Trust, which has transparent dealing costs, would be ideal. "My fund picks would include some of the new multi-asset funds, including Vanguard LifeStrategy 80pc Equity Fund with a 0.32pc TER (total expense ratio, the charges when you invest), HSBC World Index Dynamic (TER 0.83pc) and Fidelity Multi Asset Allocator Growth (TER 0.67pc)," she said. These provide an element of different assets, with a more aggressive risk tolerance, given the time frame involved. She also recommended the Vanguard SRI Global Stock Fund, which tracks the performance of the FTSE All-World Developed Index and has a TER of 0.40pc. The fund seeks to exclude securities that violate UN Global Compact principles including human rights, labour standards and environmental degradation. If the company backing a stocks and shares Junior Isa is unable to pay claims, while unlikely, parents should be covered by the Financial Services Compensation Scheme (FSCS), with a limit of £50,000 per person per provider. For now, parents with a child trust fund are not able to convert their savings into a Junior Isa, where the fund choice is better and the costs can be cheaper. Ms Gee said: "The only thing you can do, at this time, is to make sure you are content with the fund chosen and wait for better times. It really is quite wrong that there is this difference and CTF account holders are effectively penalised. Although child trust funds are no longer sold, parents can still add to existing ones. The main concern for parents with a Junior Isa is that the child has total control over the money when they turn 18 and can spend it how they wish. "We find many parents prefer to set up an ISA in their own name, if they haven't already done so, and use it for whatever purpose their household faces, rather than putting it specifically in the child's name," said Ms Gee. Where we do find the JISA works, is where higher net worth individuals are trying to slide wealth down to the next generation.