Only 10% of parents are prepared to invest a junior Isa and opt for low rates on cash instead
Despite inflation and poor interest rates hammering savings accounts, parents are still shunning the potential of bumper returns through stocks and shares investment, according to new research.
A poll of 2,018 parents and grandparents, conducted by mutual financial services firm OneFamily, found 90 per cent of parents who are saving for their children are not using a stock and shares junior Isa.
Yet parents who invested £5,000 into a fund tracking the MSCI AC World Index five years ago would have given their children a pot now worth £9,850 – £4,000 more than from a cash junior Isa.
Those who put the same amount into a junior cash Isa offering 3 per cent interest would have yielded £5,808 over the same time frame – assuming interest is calculated and compounded every month.
The calculation is also based on dividends being reinvested over the time period and does not take into fund or platform charges.
Despite the potential for eye-catching returns through investing, almost half (49 per cent) of respondents admitted to saving via a standard children’s account, while 26 per cent said they did so through a cash Isa.