6.1 Why do I need to know what a stock market is?

Earlier in this course, you learned that as a young adult, your parent or guardian can open a Junior Cash ISA or a Junior Stocks and Shares ISA. A key benefit of ISAs is that you do not pay tax on interest that you receive on your savings in these accounts.

Also, before you are 16, your parent or guardian controls your ISA. However, when you are 16 years old, you can control your ISAs.

Managing a Junior Cash ISA is easier than managing a Stocks and Shares ISA. For savings in a Junior Cash ISA, you will need to compare interest rates offered by different banks or building societies. This requires some work, but comparing interest rates is not too difficult.

Managing a Junior Stocks and Shares ISA is more difficult than managing a Junior Cash ISA. The main reason is that you have many more options to invest the money saved in your Junior Stocks and Shares ISA.

For example, Stocks and Shares ISAs can include shares of companies traded on a stock exchange (such as the London Stock Exchange). Therefore, it is important to know a little bit about how the stock market works.