Many parents give their children a flying financial start by saving or investing throughout their lives for their child’s future. A new survey* shows mothers typically take the lead in this area, while cash remains disproportionately popular.
Mum’s the word
The research shows responsibility for children’s savings is particularly borne by mums: 60% of those actively contributing to a child’s savings and investments were found to be women. Researchers noted that this fits a broader theme whereby women tend to connect investing to outcomes for their family more than to their own needs.
The survey also highlighted a drop-off in contributions as children get older. While 67% of new parents start saving or investing for their new-borns, this figure falls to 54% by the time children reach secondary-school age.
Cash is king?
The efforts of parents to save for their children is clearly admirable, but it is important to make that money work hard. Most financial products held for children are in cash, with stocks and shares Junior Individual Savings Accounts (JISAs) making up just 3% of all accounts. The JISA recently celebrated its tenth birthday, and the allowance has increased over the years from £3,600 in April 2011 to £9,000 today.
In a high-inflation environment, sticking to cash can limit the impact of parents’ saving, as the real value of cash savings is likely to be eroded over time. While not guaranteed, investment products have historically delivered better returns over the long term. It’s advisable to consider the options.
*Boring Money, 2021
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
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The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.
The information contained within this newsletter is for information only purposes and does not constitute financial advice. The purpose of this newsletter is to provide technical and general guidance and should not be interpreted as a personal recommendation or advice.
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