Recent research from JPMorgan Asset Management has found that 92% of parents who save for their children, take a low risk approach to saving, putting money aside in short term savings vehicles. More than two fifths said that their preferred option would be a building society account, 13% preferred giving the money as cash, while 15% would prefer child trust funds to the alternatives. It is believed that out of almost two thirds of parents who save for their children, claiming to put aside an average of £2,600 a year, only around 8% are likely to put the money into investment funds despite the better long-term returns they offer.
Our view:
Parents are protective of their children and we believe this follows suit with being protective of money that they invest for them. It may also have someting to do with the fact that it is much easier to walk into your local bank and open a cash account and get lovely "gifts". Parents in the know do tend to opt for investment linked funds rather than cash for the benefit of potentially higher returns. Need some help? Get your FREE consultation from us, the Online Financial Adviser of the Year 2004 and 2005.