Three key lessons the birthday lottery tells us about investing for children

The lottery of birth has a massive impact on Junior ISA (JISA) and Child Trust Fund growth over the years. If you were one of the first children to receive money from the government in February 2005, and your parents topped it up to £1,000, by the time you reached the age of 18 it would have grown into an impressive nest egg of £5,172.**

However, by the age of 18, those born a year later in 2006 would have been left with £4,609 which is £563 less than those born a year earlier, and those born in 2008 would have £5,690 which is £518 more than their 2005-born counterparts and £1,081 more than those born in 2006. This cohort has reached 18 with the most growth so far since the launch of CTFs.***

This level of variation reveals three key lessons about investing for children.

1. Timing matters, but all age groups have benefited from long-term growth

It’s a clear demonstration of the fact that while they’ve all clearly enjoyed the benefits of long-term growth, they’ve also faced the issue of timing. The stock market sell-offs of 2008 and 2016 mean those born during the down periods did phenomenally well, while those born just before the sell-offs saw lower overall growth.

Meanwhile, being born at the start of a period of phenomenal growth boosts your investments dramatically. Those born in February 2016, for example, at the bottom of the market after a sell-off, have so far enjoyed not only the subsequent recovery, but also the phenomenal post-Covid years. They have experienced two short, sharp market declines so far, but the rest of the period more than made up for it, with their investment up 261% by February 2026.

Unfortunately, the only foolproof way to spot the bottom of the market is after it has passed. It’s why regular investment can be a sensible idea, because by drip feeding money into the markets you can be sure you’re not investing it all before a market correction. When markets are down, your money will go further, and when they rise, you’ll benefit from the increase.

2. It pays to endure and stay the course

Those who were born in February 2006 might have been worried when they checked their statement three years later, if they saw their investments had dropped 15%. However, by the following February their initial £1,000 investment would be worth £1,097, and then by the age of 18 they’d have £4,609.

The financial crisis might have felt like the end of the world, especially to new investors, but markets have grown so significantly since then, that the sell-off looks like a blip in the bigger picture. It demonstrates that if you’re happy with your portfolio, often the best thing to do in tough times is wait it out.

For those born in any February since 2005, it doesn’t matter which year you started, or what happened in the immediate future, in every case over a five-year period, you would have seen your investments grow – with the toughest period delivering 19% growth and the best more than doubling.

Investments also grew over every 10-year period, with the worst seeing 75% growth and the best up 261%. It means the markets delivering 7% on average even over the trickiest decade. Over the full 18 years, the worst performing period saw growth of 361% and the best 469%, revealing just how rewarding investment can be over the longer term.

Figures assume the investment tracks the MSCI ACWI Index. Does not include charges.

3. It’s important to plan for variation

If you have more than one child, and they are born separately, you need to assume that one will reach the age of 18 with more in their investment fund than the other, and the difference can be significant.

In most cases, the people contributing to a child’s JISA are less concerned about how equal the outcome is, as long as what they put in for each child was fair. However, depending on how competitive the children are, you may want to talk to them as their money grows, so they appreciate the role of investment performance in the end result.

Some people will choose to top up the accounts, so both children reach 18 with the same sums. There’s no right or wrong approach. It will usually depend on what the JISA is for – whether it’s designed to introduce children to investment and provide a nest egg – or to fund something very specific.

**Child Trust Funds were launched in January 2005. They were available to all children born between 1 September 2002 and 2 January 2011, but weren’t available until 2005. It means the first children who had 18 years of investment were those born in 2005, and February was chosen to allow for the process of getting started. There have been four cohorts who have invested for the full 18 years so far – those who turned 18 in 2026, those who did in 2025, those who did in 2024 and those who did in 2023. For those born from November 2011, we assume they invested through the Junior ISA.
***Source: FE Analytics