Saving for children with investment companies
Christmas is fast approaching, with children writing their letters to Father Christmas and advent calendar windows being opened. Parents wanting to give a gift that lasts a bit longer may want to consider putting some money aside and contributing to an investment company Junior ISA or saving scheme, which could certainly pay-off in the future.
Over the past 18 years to the end of October 2017, a one-off £100 lump sum investment in the average investment company (excl. VCTs) would have grown to £481, whilst an annual £100 lump sum investment made every year (£1,800 invested in total) would have grown to a very impressive £6,197. For those wanting to be particularly generous and make a regular £50 monthly contribution, over 18 years to the end October 2017 (£10,800 invested in total) this would be worth a staggering £33,281 – a very generous present for the future.
Interestingly, the best performing sectors over 18 years are Sector Specialist: Biotechnology & Healthcare, up 1,198%; Global Emerging Markets, up 743%; European Smaller Companies, up 733%; Asia Pacific – Excluding Japan, up 583% and UK Smaller Companies, up 508%.
In a survey of the sandwich generation* – those aged 35-55 who have elderly parents and children – by the Association of Investment Companies (AIC), 46% of people said they were planning to contribute financially to support their child/children after they finished school. Results also showed that the average amount they were expecting to contribute was a substantial £40,088. So, investing regularly in an investment company saving scheme for children could certainly help parents meet their future financial contributions to their child.
Annabel Brodie-Smith, Communications Director of the Association of Investment Companies said: “Christmas is often referred to as the ‘season of giving’ and we all want to make our children’s Christmases magical by giving them a desired toy or the latest piece of technology. But as a parent, we know that many toys and presents can quickly get forgotten. With so many financial demands placed being placed on our children today, it’s no wonder many parents and grandparents are thinking about how they can financially help and the sooner they start saving the better.
“Parents might want to consider contributing to a Junior ISA or investment company saving scheme for their children which can help to build a nest egg that can make a real difference to their futures. Investment companies give investors access to the long-term potential of the stock market and have strong long-term performance. They invest in a range of investments on your behalf to spread the investment risk and there are a diverse selection of sectors and risk profiles to choose from. You can start saving for a child with relatively modest amounts and over time investment companies could be an excellent way to give your children a head start in life.”