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Not just for Christmas

25 November 2019

Saving for children with investment companies.

With Christmas around the corner, children will soon be eagerly finishing their letters to Santa and counting down the sleeps before the big day. Parents and grandparents, on the other hand, may want to give a present that lasts a bit longer and might consider saving for their children over the festive season. An investment could grow into a nest egg which could make a serious financial difference to a young person.

If an 18-year-old’s parents or grandparents had made a one-off £1,000 investment in the average investment company when their child was born, it would now be worth an impressive £5,633 (a 463% return). If they preferred to make a monthly investment instead, say £50 a month, their total £10,800 investment over 18 years would have grown to £31,818 by the time the child reached adulthood, enough for a deposit for a first home or to make a significant contribution to university costs.

There is a clear geographical theme to the top-performing investment company sectors over the last 18 years. First is Country Specialist: Asia Pacific ex Japan, with a total return of 1,133%, followed by Global Emerging Markets (912%) and Asia Pacific (747%). The next best performing sectors are European Smaller Companies (724%) and UK Smaller Companies (721%). Popular sectors for saving for children include UK All Companies which has a total return of 536% over 18 years and the Global sector (452%).

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “Every parent wants to make their child’s Christmas magical and give them the presents they want. But many parents and relatives are aware that the financial demands being placed on young people today have never been greater, so they may want to give a gift that’s not just for Christmas.

“Parents might want to consider investing in an investment company for their child which can help to build a nest egg for their future. Investment companies give investors access to the long-term potential of the stock market and have performed strongly over time. They invest in a range of investments on your behalf to spread risk and there is a diverse range of sectors and styles to choose from. You can start saving for a child from £50 a month and over the long term investment companies can be an excellent way to give your children a head start in life.”

Monthly investing in investment companies

 

£50 monthly investment over the past 10 years 

£50 monthly investment over the past 18 years 

Sum invested

£6,000

£10,800

Overall weighted average investment company ex VCTs & 3i

£10,383

£31,818

 

 

 

 

 

Lump sum investment in investment companies

 

£1,000 lump sum
investment 10 years ago

£1,000 lump sum
investment 18 years ago

Sum invested

£1,000

£1,000

Overall weighted average investment company ex VCTs & 3i

£2,968

£5,633

 

 

 

 

 

 

 

Source: AIC/Morningstar.

For more information on saving for children with investment companies, visit the dedicated page ‘Saving for your children’s future?’ on www.theaic.co.uk which has six tips on saving for children, as well as a video, guide and jargon buster.

-Ends-

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Notes

  1. Performance for the average investment company is the % share price total return for the weighted average investment company (excluding VCTs and 3i). Ten-year performance is from 1 November 2009 to 31 October 2019. Eighteen-year performance is from 1 November 2001 to 31 October 2019. Source: AIC/Morningstar.
  2. Performance for the investment company sectors is the % share price total return for the peer group weighted averages. Eighteen-year performance is from 1 November 2001 to 31 October 2019. Source: AIC/Morningstar.
  3. 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 362 members and the industry has total assets of approximately £197 billion.
  4. 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

Elmley de la Cour
Communications Manager
Tel: 020 7282 5583
elmley.delacour@theaic.co.uk
@aicpress

William Sanderson
Communications Executive
Tel: 020 7282 5584
william.sanderson@theaic.co.uk
@aicpress