Junior Bond – Your Questions Answered
Helpful answers to the most frequently asked Junior Bond questions
What exactly is a Junior Bond?
A Junior Bond is a long-term regular savings endowment plan for an adult to save on behalf of a child.
How much interest is paid?
The Junior Bond is not an interest paying plan like a Building Society Deposit Account. It is a stock market based investment, which aims to achieve long term capital growth, whilst spreading risk across a wide range of assets.
How will my premiums be invested?
The Junior Bond invests into the Sovereign Fund. With this fund we carefully spread your investments, primarily investing in UK and overseas shares but also including property, fixed interest securities and cash. The Sovereign Fund is a special tax-exempt fund*, which has the potential to outperform a bank or building society deposit account. Please remember that investment values can fall as well as rise (so your child could get back less than was paid in) whereas bank and building society deposit accounts are capital protected, and offer easier accessibility.
* Tax legislation is subject to change.
How long do I save for?
You decide how long you want the Junior Bond to run. Most people save until a child's 18th, 21st or 25th birthday. You have to make regular payments for a minimum of 10 years. The maximum investment period is 25 years.
How much can I save and for how long?
You can save monthly – between £15 and £25 per month. Annually – between £165 and £270 per year.
Who can take out a Junior Bond?
Anyone can start a Junior Bond for a child they love whether it be your child, a grandchild, nephew, niece or family friend. Whatever your relationship with the child, you can save for their future.
Will a Junior Bond outperform a building society deposit account?
The Junior Bond invests in our Sovereign Fund, which spreads your investments into a wide range of carefully selected assets. These are, primarily, shares in leading UK and overseas companies, but also include fixed interest securities, property and cash.
With this kind of investment base, the bond has the potential to outperform an interest bearing building society deposit account. But, of course, the value of the Junior Bond can fall as well as rise, whereas in a deposit account your capital is protected, earns interest, and may be more accessible.
As with any plan that is linked to stockmarket investments the values can fall as well as rise and it is possible that the child could get back less than you put in.
We will, of course send an annual statement so you can track how well the Junior Bond is performing. You can also call our Customer Service Team at any time for a valuation.
If there's something you'd like to ask that's not been covered here, or to apply, please call us on 0800 616 695 or email us.
Telephone calls may be monitored and recorded for training purposes.
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