Interest Calculator Junior ISA

Junior ISA Compound Interest Formula:

\[ A = P \times (1 + R / n)^{n \times T} \]

Principal Amount (P):

GBP

Annual Interest Rate (R):

decimal

Compounding Frequency (n):

Time Period (T):

years

Maturity Amount (A):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What Is The Junior ISA Compound Interest Formula?

The Junior ISA compound interest formula calculates the maturity amount of a UK Junior Individual Savings Account, taking into account the principal investment, annual interest rate, compounding frequency, and time period.

2. How Does The Calculator Work?

The calculator uses the compound interest formula:

\[ A = P \times (1 + R / n)^{n \times T} \]

Where:

\( A \) — Maturity amount (GBP)
\( P \) — Principal investment amount (GBP)
\( R \) — Annual interest rate (decimal)
\( n \) — Compounding frequency per year
\( T \) — Time period in years

Explanation: The formula calculates how an initial investment grows over time with compound interest, where interest is added to the principal at regular intervals, earning more interest in subsequent periods.

3. Importance Of Compound Interest Calculation

Details: Understanding compound interest is essential for long-term financial planning, especially for Junior ISAs which are designed to grow savings tax-free for children until they reach adulthood.

4. Using The Calculator

Tips: Enter the principal amount in GBP, annual interest rate as a decimal (e.g., 0.05 for 5%), select compounding frequency, and time period in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a Junior ISA?
A: A Junior ISA is a tax-free savings account for children in the UK. The money is locked until the child turns 18, making it ideal for long-term savings growth.

Q2: How does compounding frequency affect returns?
A: More frequent compounding (monthly vs annually) results in higher returns due to interest being calculated and added to the principal more often.

Q3: What are typical interest rates for Junior ISAs?
A: Rates vary by provider and market conditions, but typically range from 1% to 5% annually for cash ISAs, with potentially higher returns for stocks and shares ISAs.

Q4: Are there contribution limits for Junior ISAs?
A: Yes, for the 2024/2025 tax year, the annual contribution limit is £9,000 per child across all Junior ISAs.

Q5: Can withdrawals be made before the child turns 18?
A: Generally, no. Junior ISAs are designed to be long-term savings vehicles, with funds inaccessible until the child reaches 18, except in specific circumstances.