Are 18-year-olds spending or investing their Junior ISA?

Turning 18 is a massive cause for celebration. It’s an even bigger one if your parents have been saving into a Junior ISA and it becomes yours. That’s a pretty impressive 18th birthday present by anyone’s standards.

As a parent whose daughter has just turned 18, I can’t help wondering what will happen to the money we’ve diligently and slowly saved away for her.

Will she see it for what it is - a financial nest egg to respect, nurture and grow until she actually needs the money for something meaningful? Or will she blow the lot?

Like many parents, I imagine, I worry she might be tempted by the latter.

But new analysis from Fidelity into how young adults behave once they take over their Junior ISA gives me hope… even if there is room for improvement.

So, what does the analysis show?

Many young adults keep their stocks and shares ISA - but fewer actively engage with it

Our analysis looked at more than 6,000 customers whose Junior ISA converted into an adult ISA after 2021. Most have kept the account, with 91.5% of customers still holding an active stocks and shares ISA today. But while they’re keeping their ISA, far fewer are taking the next step and actively investing.

What’s more, engagement is often low. 51% have made no buys, sells or switches since maturity. And only around 35% have added more money.

Meanwhile, 8.8% have closed their ISA completely. Those who do this tend to do so within 11 months.

Where are they invested?

Funds make up most of these young adults’ asset base, with 4,259 customers holding £113.5m in funds. A lot hold cash too, with 2,869 customers holding £9.3m in cash.

And while the value of cash is significantly less than the amount invested, it’s still a sizeable sum. This creates an opportunity to help young adults understand what they’ve inherited and what choices they now have.

For some, cash may be useful if they need access to money soon. For others, understanding the difference between holding cash and investing for long-term growth could be an important first step.

It shows there’s a real need to help young people understand what they have, why it matters and what they could do next. That does not mean pressuring them to make a particular choice. It means helping them feel informed enough to make decisions with confidence.

For parents, guardians and grandparents, the message is simple. The conversation should start before their 18th birthday. A Junior ISA can be more than a pot of money. It can be a practical way to teach a young person how investing works in real life.

Three conversations to have before a Junior ISA matures

1. Explain what they already own

Many young adults inherit an ISA without fully understanding what’s inside it. Start with whether the account holds funds, shares, ETFs or cash, and what those investments are designed to do.

This doesn’t need to be a technical lesson. It can be as simple as showing them that their money may be spread across different companies, countries or sectors, and that the value can rise and fall over time.

• Read: Tools that can make you a better investor

2. Talk about choices, not pressure

At 18, the reality is that this money is now theirs. They may want to leave it invested, add to it, withdraw some of it or change where it is invested. What matters is helping them understand the trade-offs.

Selling everything may feel simple, but it could also mean giving up future growth potential. Holding large amounts in cash may feel safe, but it may not keep pace with inflation over the long term. Adding small regular contributions could help turn an inherited account into a lifelong investing habit. Our principles for good investing explain all this and more.

• Read: 5 principles for good investing

3. Make learning part of the handover

The best outcome is not just that a young adult keeps their ISA. It is that they feel confident enough to make informed decisions about it.

We had a customer ask us what the best way of teaching their teen was about investing. This article gives you a lot of useful links to set your young adult off on the right path.

• Read: How can I teach my teen about investing?

What’s the takeaway from all this? A financial head start is only powerful if it is understood

The data shows that many young adults are holding on to their ISAs. That’s encouraging. But the bigger challenge is turning that early financial advantage into confidence, engagement and long-term positive saving habits.

For families, the Junior ISA maturity moment is a chance to do more than hand over an account. It’s a chance to start a conversation about money, choice and the future.

And for young adults, it could be the first step towards becoming not just the owner of an ISA, but a lifelong investor who understands the power investing can have in helping them reach their future financial goals.

• Read: The tax benefits of an ISA
• Read: What could £10k mean to your child?
• Watch: These are the money lessons to teach your children

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. 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.