What's the difference between a junior cash ISA and stocks and shares ISA?

When it comes to saving up to give your child a bright future, a Junior Individual Savings Account (JISA) is a great place to start.

A JISA is a tax-efficient savings account for your child. A parent or guardian can open an account, and anyone can pay into it – saving up to a total of £9,000 in the 2025/2026 tax year. 

They get full access when they turn 18 and unlike a normal savings account, any interest or capital gains made within a JISA are tax free.

JISAs come in two flavours – cash, and stocks and shares. Each has its own benefits and risks, so it’s important to know what you’re getting into. Let’s take a look at how they measure up.

A cash JISA is essentially a savings account for your child that uses interest to grow your money over time. 

The good

Cash JISAs are generally a safer and simpler option on the whole, which is their biggest selling point compared to a stocks and shares JISA. You put money in, it grows with interest, and your child can take it out when they turn 18. 

You’re guaranteed to get back at least what you put in and you don’t pay tax on the interest you earn.

Because a cash JISA guarantees you don’t lose any of your savings, they’re generally a good choice for short-term goals

The risks

But choosing a cash JISA doesn’t come without its risks. Your savings won’t go down, but inflation, the cost of living or low interest rates could mean they’re worth less as more time goes by.

This could mean your child’s money has less ‘buying power’ when they withdraw it. And it’s another reason people often choose a cash JISA for short-term savings goals instead of for the long term.

A stocks and shares JISA is like a cash JISA, but unlike cash, you can invest the money in the stock market through funds, shares and many other investment options. 

Many people choose this option because there’s more potential to grow their savings by investing, though this comes with extra risks.

The good

Because you can choose to invest your money with a stocks and shares JISA, there are more opportunities to see your money grow and make a higher return compared to the interest on a cash JISA.

But like with any other investment, you could get back less than you put in.

Since the money held in a stocks and shares JISA is also tax free, you won’t pay tax on any capital gains or dividends you receive.

Savers often see stocks and shares JISAs as a better option for long-term savings goals, hoping that their savings grow faster than inflation, leaving them with more buying power for their deposits.

The risks

It’s important to understand that a stocks and shares JISA is an investment product. And like with any investments, the value of your savings can go down as well as up. 

Your savings aren’t guaranteed. So you might end up with less than you put in.

Before opening a stocks and shares JISA, make sure you understand investment risk and be honest with yourself about how much risk you’re willing to deal with.

The biggest difference between a cash JISA and stocks and shares JISA is how they both try to grow your child’s savings, and the different risks these approaches bring to your savings:

• Cash JISA: Grows your savings with interest, but inflation could make your savings worth less over time. Better for short-term savings goals.
• Stocks and shares JISA: Invests your savings into the stock market to get potentially higher returns. But you could end up with less than you put in. More suited to long-term savings goals.

Here’s a couple of examples when you might choose one over the other.

If you want to put some money aside for the next five years to help your child pay for university, you might choose a cash JISA. This would mean:

• Your savings are guaranteed
• Your savings grow
• You don't lose any savings in the stock market
• Because of the relatively small amount of time, inflation only has a small effect on your savings' buying power.

But if your child is two years old and you're saving for university in 16 years' time, a stocks and shares JISA might be a better choice for a few reasons:

• You're comfortable with the risk involved
• Your savings could have more opportunity to grow over 16 years
• Your savings' growth might be higher than inflation over the same period

Whichever you choose, it’s often a good idea to seek financial advice. If you don’t already have one, you can find a financial adviser at MoneyHelper. There will be a charge for advice, but there are often a number of ways to pay.

If you’re thinking about opening either a cash or stocks and shares JISA, you’ll find everything you need to know in our handy article on who can open and pay into one.