A gift that keeps on giving: saving for children with investment trusts
Average investment trust returns £4,631 on £1,000 over 18 years. Private Equity sector tops performance charts.
With Christmas just around the corner, children are getting excited about the presents Santa might bring. Parents and grandparents looking for a gift that lasts a bit longer might like to consider making an investment for their child. It won’t help fill their stocking, but it could make a real difference to their future.
“With ever increasing financial demands on young people, parents and grandparents could consider making an investment to give their child a financial leg up. A modest amount invested now could help with buying a car, a deposit for a first home or university tuition fees.”
Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC)
If a parent or grandparent had invested a one-off £1,000 in the average investment trust for a child 18 years ago, it would now be worth £4,631, equivalent to an annualised return of 7.9%. However, if they had made investments of £50 a month instead, their total investment of £10,800 over 18 years would have trebled and now be worth an impressive £32,128. A hefty pot that could help with a deposit on a first home, further education costs or buying a car.
The top performing investment trust sector over the last 18 years is Private Equity, with a total return of £8,243 for every £1,000 invested. This is followed by Biotechnology & Healthcare (£7,353), Asia Pacific Smaller Companies (£6,651), and Global (£6,273).
Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “With ever increasing financial demands on young people, parents and grandparents could consider making an investment to give their child a financial leg up. A modest amount invested now could help with buying a car, a deposit for a first home or university tuition fees.
“Investment trusts are known for delivering strong performance, benefiting from the growth potential of the stock market over long periods. Through a diversified portfolio of investments, they provide a way to spread investment risk. Investing as little as £50 a month in the average investment trust over the past 18 years would have grown to over £32,000. That’s a sizeable contribution to set up a young person for the future. Saving within a Junior ISA is the best way to ensure that any income and capital gains remain tax-free even after your child turns 18.”
Monthly investing in investment trusts
£50 monthly investment over the past 10 years | £50 monthly investment over the past 18 years | |
|---|---|---|
| Sum invested | £6,000 | £10,800 |
| Average investment trust return | £10,039 | £32,128 |
Lump sum investment in investment trusts
£1,000 lump sum | £1,000 lump sum | |
|---|---|---|
| Sum invested | £1,000 | £1,000 |
| Average investment trust return | £2,718 | £4,631 |
Source: theaic.co.uk / Morningstar (to 22/11/24). Average investment trust return is weighted by market capitalisation and excludes VCTs. Amounts rounded to nearest pound.
For more information on saving for children with investment trusts,
read our guide ‘Saving for your children’s future?’ on theaic.co.uk.
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Notes to editors
- The Association of Investment Companies (AIC) represents a broad range of investment trusts and VCTs, collectively known as investment companies. The AIC’s vision is for closed-ended investment companies to be understood and considered by every investor. The AIC has 319 members and the industry has total assets of approximately £269 billion.
- For more information about the AIC and investment trusts, visit the AIC’s website.
- Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investment company shares, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all.
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