What could £10k mean to your child?

I can’t quite believe I’m writing this. It feels like only yesterday I was packing my nearly 18-year-old daughter’s school lunches and tying her shoelaces. Now she’s on the cusp of adulthood. And that means taking control of her Junior ISA (which, for the purpose of this piece, I’ve said is £10,000).

But what words of wisdom can I impart as she takes ownership of her nest egg? Because while we’ve spent years building this pot with the best intentions - hoping it might help with a house deposit, further education, or simply give her a stronger financial footing - there’s nothing to stop her spending the whole lot.

Instead of trying to control the outcome (something I can’t do), I decided to show her two very different scenarios as to what this money could become if she continued to build on it. And to trust her to make the decision that's right for her. The scenarios are extremes. But that’s the beauty of it. They’ll give her lots to think about.

So, whether your child is just starting to crawl or learning to drive - I hope you and yours will find this helpful, whether that’s in the near, or distant future (which - believe me - will come around sooner than you think).

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Scenario one: keeping it accessible in a Stocks and Shares ISA

For many young adults, flexibility will matter.

In this scenario, the £10,000 Junior ISA matures and stays invested in a Stocks and Shares ISA - so it remains accessible - and they add £100 a month until age 30. That’s 12 years of contributions on top of the original pot.

Here’s what that pot could look like with these illustrative levels of growth (which take fees into account at 1.1%):

• Low growth (2%): £26,343
• Medium growth (5%): £34,131
• High growth (8%): £44,400

It’s a solid outcome, particularly at the higher end of the spectrum.

The pot has grown meaningfully, and importantly, it’s still within reach. Whether it’s a first home, a career change, or simply a financial cushion, this route offers options.

For many young adults, that balance between growth and accessibility will feel like a sensible middle ground.

• Try our handy ISA calculator yourself

Scenario two: locking it away for the future in a Self-Invested Personal Pension

The alternative is a much longer-term view.

Instead of keeping the money accessible, they invest their £10,000 into a pension - a SIPP - and continue contributing £100 a month (which is topped up to £125 by pension tax relief, assuming they’re a basic rate taxpayer) until age 30.

After that, they stop contributing altogether.

From that point on, it’s simply left invested until age 57 (this age is based on current minimum pension access rules, although this could rise in future).

Here’s how that might play out (again for illustrative purposes this growth assumes fees of 1.1%):

• 2% growth: £38,396
• 5% growth: £108,745
• 8% growth: £302,542

The difference is striking.

Not because more money has been paid into it than the Stocks and Shares ISA - but because it has been given more time to grow. Of course, the SIPP also gets a helping hand from tax relief, even though time - in this case - does a lot of the heavy lifting.

It's also worth remembering that inflation will reduce what these amounts can buy in the future. A pound at age 57 won't stretch as far as a pound at age 30. Even if you factored in inflation, it’s likely the pension would still come out significantly ahead in this example.

What did my daughter think about the two scenarios?

I then gave these scenarios to my daughter to see what her reaction would be.

"I totally get how lucky I am to have been given a pot of money in the first place. I get that it’s something that's been built up over years and I wouldn't want to waste it.

As my mum knows, I've always been quite careful with money anyway. I like finding a deal, I compare prices before I buy things, and I'm not someone who spends money just because it's there.

Maybe that's because Mum has always talked openly about money and saving. Maybe it's just my personality. It's probably a bit of both.

I’m not going to lie, I was surprised by the numbers she gave me to look at. There’s a massive difference when you consider you’ve saved away the same amount of money… one’s just locked away for a lot longer.

Retirement feels so far away that it's hard to imagine caring about it right now. When you're 18, 57 sounds like another lifetime. But when you look at the numbers, it's difficult to ignore them. The difference is pretty incredible.

At the same time, I think I'd struggle with the idea of setting aside all of that money away right now. Realistically, I'd probably want access to it one day for something like a house deposit or buying a flat. Knowing it's there if I need it feels important.

So, while the pension option is really tempting when you see what it could grow into, I don't think I'd want to give up that flexibility completely.

Mum’s talked to me about the importance of starting my pension early. I know that it’s possible to opt out when I start working and she’s told me not to. I didn’t really get it until I saw those figures! It’s made me think differently about my pension. I definitely won’t be opting out now! We learnt about compounding in school, but to see the impact in reality is something else.

If there's one thing I'll definitely take away from this, it's that when I start working, I'll pay attention to my pension from day one. I don’t want to be working forever!"

What’s our role as parents in all this? It’s good to talk.

What this exercise has shown me is how we need to talk about money. It shouldn’t be a taboo.

Because whether that £10,000 is spent, saved, or invested, the lesson it carries could last far longer.

And if we can help our children see even a fraction of what’s possible - whether that’s £44,400 by 30 or £302,542 at retirement - then we’ve done something just as valuable as building the pot in the first place.

As for my daughter’s response, what pleased me most was that she understood the trade-off that comes with investing. She recognised the value of flexibility today, while also appreciating the power of investing for tomorrow.

And, if I'm completely honest, I'm just grateful she's not planning to blow the lot on one crazy summer in Ibiza. At 18, I'm not entirely sure I'd have been quite so sensible.

• Read: Junior ISAs versus Junior SIPPs: the basics
• Read: Letter to my grandson: investment lessons for life
• Read: The stunning impact of maxing out a Junior ISA

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. Junior ISAs are long term tax-efficient savings accounts for children.Withdrawals will not be possible until the child reaches age 18. A Junior ISA is only available to children under the age of 18 who are resident in the UK. It is not possible to hold both a Junior ISA and a Child Trust Fund (CTF). If your child was born between 1 September 2002 and 2 January 2011 the Government would have automatically opened a CTF on your child’s behalf. If your child holds a CTF they can transfer the investment into a Junior ISA. Please note that Fidelity does not allow for CTF transfers into a Junior ISA. Parents or guardians can open the Junior ISA and manage the account but the money belongs to the child and the investment is locked away until the child reaches 18 years old. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.