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Giving a gift for their future

5 December 2017

Saving for children with investment companies.

AIC consumer guide on ‘Saving for your children’s future’

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%.

A gift for tomorrow

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.”

Manager-sponsored children investment schemes

Scheme

Minimum monthly regular savings

Minimum lump sum

Initial admin/annual charges

Other charges

Aberdeen Asset Managers

£30

£150

Initial/Admin: Nil. Annual: Nil.

Purchase: Nil. Sale: £10. Transfer Out: £30. Switch: £10.

Alliance Trust Savings

£50

£50

Initial/Admin: Nil. Annual: £3.33 per month.

Purchase: £9.99 (online). £50 (phone & post). Sale: £9.99 (online). £50 (phone & post). Transfer Out: £60. Switch: N/a.

Baillie Gifford Savings Management

£25

£100

Initial/Admin: Nil. Annual: Nil.

Purchase: Nil. Sale: £22. Transfer Out: N/a. Switch: First free in any 12-month period, £22 thereafter.

Dunedin (through Alliance Trust Savings)

£50

£50

Initial/Admin: Nil. Annual: £3.33 per month.

Purchase: £9.99 (online). £50 (phone & post). Sale: £9.99 (online). £50 (phone & post). Transfer Out: £60. Switch: N/a.

F&C Management

£25

£250

Initial/Admin: Nil. Annual: £25.

Purchase: £8 (online) £12 (post). Sale: £8 (online) £12 (post). Transfer Out: £12. Switch: Nil.

J.P. Morgan Asset Management

£50

£500 (top up £100)

Initial/Admin: Nil. Annual: Nil.

Purchase: £10. Sale: £10 (N/A for regular savers). Transfer Out: Nil. Switch: £10.

Martin Currie (through Alliance Trust Savings)

£50

£50

 

Initial/Admin: Nil. Annual: £3.33 per month.

Purchase: £9.99 (online). £50 (phone & post). Sale: £9.99 (online). £50 (phone & post). Transfer Out: £60. Switch: N/a.

Witan Investment Services

£50

£250

Initial/Admin: Nil. Annual: £31.60.

Purchase: Nil. Sale: Nil. Transfer Out: Nil. Switch: N/a.

Source: AIC Stats

Manager-sponsored Junior ISAs

Scheme

Minimum monthly regular savings

Minimum lump sum

Initial admin charges

Annual charges

Other charges

Other features

Alliance Trust Savings

£50

£50

Nil

£3.33 per month

Purchase: £9.99 (online). £50 (phone & post). Sale: £9.99 (online). £50 (phone & post). Transfer Out: £100 Switch: N/a.

Alliance Trust, all other investment companies, UK, AIM/ISDX shares, fixed interest, OEICs, unit trusts, ETF/ETCs, cash deposit and share exchange. Statements issued twice a year.

F&C Management

£30

£250

Nil

£25

Purchase: £8 (online) £12 (post). Sale: £8 (online) £12 (post). Transfer Out: £50. Switch: Nil.

Online service and online JISA application: www.fandc.com. Statements issued twice a year.

Fidelity

£50

£500

Nil

Nil

Purchase: Nil. Sale: Nil. Transfer Out: N/a. Switch: Nil.

Statements issued twice a year.

Frostrow (through Alliance Trust Savings)

£50

£50

Nil

£3.33 per month

Purchase: £9.99 (online). £50 (phone & post). Sale: £9.99 (online). £50 (phone & post). Transfer Out: £100 Switch: N/a.

Alliance Trust, all other investment companies, UK, AIM/ISDX shares, fixed interest, OEICs, unit trusts, ETF/ETCs, cash deposit and share exchange. Statements issued twice a year.

J.P. Morgan Asset Management

£50

£100

Nil

Nil

Purchase: £10. Sale: £10 (n/a for regular savers). Transfer Out: N/a. Switch: £10.

Investors cannot invest directly in Elect Managed Cash. Statements issued twice a year. Annual & Interim reports.

Martin Currie (through Alliance Trust Savings)

£50

£50

Nil

£3.33 per month

Purchase: £9.99 (online). £50 (phone & post). Sale: £9.99 (online). £50 (phone & post). Transfer Out: £100 Switch: N/a.

Alliance Trust, all other investment companies, UK, AIM/ISDX shares, fixed interest, OEICs, unit trusts, ETF/ETCs, cash deposit and share exchange. Statements issued twice a year.

NVM Private Equity (through Alliance Trust Savings)

£50

£50

Nil

£3.33 per month

Purchase: £9.99 (online). £50 (phone & post). Sale: £9.99 (online). £50 (phone & post). Transfer Out: £100 Switch: N/a.

Alliance Trust, all other investment companies, UK, AIM/ISDX shares, fixed interest, OEICs, unit trusts, ETF/ETCs, cash deposit and share exchange. Statements issued twice a year.

Witan Investment Services

£50

£250

Nil

£31.60

Purchase: Nil. Sale: Nil. Transfer Out: Nil. Switch: N/a.

Statements issued twice a year. Dividend reinvested. Annual & Interim reports. For more information, visit:
https://www.witan.com/how-invest/jump-jisa-child-trust-fund

Source: AIC Stats

-Ends-

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Notes

  1. Performance data is to 31 October 2017 based on the last official close price at the month end, on a % share price total return basis. No expenses taken into account. Source: AIC using Morningstar.
  2. *The sandwich generation research was conducted by Opinium from the 22 August - 5 September 2017 amongst 2,011 UK parents aged 35-55, who have a minimum household income of £50k, at least one parent/parent-in-law living and who have or would consider having a stocks and shares ISA.
  3. Charges shown for manager-sponsored children investment schemes and Junior ISAs may not be comprehensive and cover purchase/sale only and do not include stamp duty, VAT (where applicable) or the management costs of the underlying investment.
  4. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment.  Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs.  The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 349 members and the industry has total assets of approximately £172 billion.
  5. 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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Media enquiries

Annabel Brodie-Smith
Communications Director
Tel: 020 7282 5580
annabel.brodie-smith@theaic.co.uk
@annabelbrodies
@aicpress

Laura Thomas
PR & Marketing Manager
Tel: 020 7282 5551
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@aicpress

Elmley de la Cour
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Tel: 020 7282 5583
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