I'm a money expert - how to turn £50 a month into £18,000

It is a long-term, tax-free way to save for the future. Junior ISAS were introduced in 2011, and anyone can contribute to them. They replaced the child trust fund (CTF), which was discontinued amid government spending cuts. Unlike CTFs, junior ISAS are not started with a government voucher-all of the contributions are voluntary.

Parents or guardians open an account on a child's behalf, and anyone can contribute to it. The maximum that can be paid in each year is £9,000. The money is locked away until the child turns 18, at which point they can do what they want with it.

According to Sarah Marsh, the Guardian's Consumer affairs correspondent, your child could receive a £18,000 windfall on their 18th birthday.

She explains: "There are two types of junior Isa: a cash version, which is like a traditional savings account; or an investment version, which can hold stocks and shares or funds.

"A child can have both at the same time, but only one of each type. The total annual contribution across both is capped at £9,000, meaning parents can split savings between cash and investments within that limit.

"If parents gift money to their children and it's saved outside a junior Isa, any interest above £100 a year for each parent is taxed as the parent's income, not the child's. This could create a tax bill if it pushes the parent over their allowances. In a junior Isa, all growth is tax-free, which is why many parents choose them."

To get started, parents will need their own National Insurance number, their child's details, and information about any existing CTF or Junior ISA they plan to transfer.

Laura Suter, the director of personal finance at the investment company AJ Bell, adds: "Whichever parent opens the account will be the registered contact, who is then responsible for choosing investments and managing the account until they turn 18. If your child already has a CTF, you'll need to transfer it over when opening a junior Isa, as both accounts can't be held at the same time."

Anna Bowes, a personal savings expert at The Private Office, says one of the simplest ways to begin is with a cash savings account. "These are easy to understand and can also help children to get excited about the importance of saving as they grow, getting them into the saving habit from an early age," she tells The Guardian.

"If you're opting for a cash junior Isa account you should hunt out the best interest rate on offer. Many banks and building societies will rely on people not moving their money when interest rates drop, but if you want to make the most of your child's future savings you should make a note to keep checking you're getting the best rate. If your provider has cut rates, you should switch to a better deal."

You can either set up a monthly direct debit, say of £50, or just put in lump sums as and when like for birthdays and Christmas. Suter says.

"If you can save a small amount regularly into a junior Isa, it can really build upover time, she says. For example, assuming your investments grow by 5% a year after charges, investing £50 per month from birth would leave your child with a pot worth £18,050 by age 18" she says,

If you can afford to invest the full £9,000 junior Isa allowance each year, also growing at 5% a year after charges, from birth to age 18 it would give a pot of £265,851.

"The generous £9,000 allowance, comes with the trade-off in that the money is locked up until the child turns 18. But it means they have a nest egg to put towards university fees, a car or their first home.

Government data shows 42% of all money paid into junior Isas in 2022-23 went into cash junior Isas, rather than the investment version

The funds ultimately belong to the child whose name the account is in, but they cannot access any of the money until they reach the age of 18. However, from age 16 a young person can manage their account or open their own one, giving them the chance to learn about investing and saving. You could support this by talking to them about what they have and how you have saved or invested it so far, and how you made those decisions.

And research showed that fewer than one in 10 junior Isa holders withdrew the money and closed their account when they reached 18.