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Saving for children with investment companies

10 December 2018

The AIC release full details of investment company children’s savings schemes and Junior ISAs.

As children eagerly count down the number of sleeps before Christmas, they’ll be thinking with excitement about what presents Santa might bring. However, for parents and relatives wanting to give a gift that lasts a bit longer, they might like to consider investing for their child, perhaps through an investment company children’s savings scheme or Junior ISA. Over the long term it could grow into a nest-egg and make a big difference towards something like education costs or a deposit for a first property.

An investment in the average investment company 18 years ago would have more than quadrupled today, returning 311%. On the other hand, investors who chose to invest £100 a year over the last 18 years (£1,800 in total) would have seen their investment grow to an impressive £5,838. For those who wanted to be particularly generous and make a £50 monthly contribution (£10,800 in total), their investment would now be worth a staggering £31,933.

Interestingly, over the past 18 years the top-performing sectors are Asia Pacific – Excluding Japan – up 561%, Global Emerging Markets – 461%, UK Smaller Companies – 420%, Global – 419% and Europe – 386%.

To help promote the benefits of saving for children with investment companies, the Association of Investment Companies (AIC) has been running an educational programme in the run-up to Christmas. A new animated video ‘Saving for your children’s future?’, a  ‘Saving for children’ guide, six tips on saving for children and a jargon buster are all available on a dedicated page on the AIC website. The AIC is also running a competition to win five prizes of £1,000 to invest for children in investment companies. Visit www.theaic.co.uk/pig/enter to enter.

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC) said: “It’s understandable that parents want to give their children the presents they want most at Christmas. But with so many financial pressures facing young people today, setting aside some money in an investment company could mean being able to give them a life-changing sum later in life.

“Investment companies give your money access to the growth potential of the stock market, which over the long term has outperformed cash and other types of investment. Investment companies are diversified, meaning they spread your risk across lots of different investments and regions. When investing for children over long time periods, like 18 or 21 years, investment companies’ formidable performance really comes into its own.”

Monthly investing with investment companies to 30 November 2018

  £50 monthly saving over past 10 years £50 monthly saving over past 18 years
Sum invested £6,000 £10,800
Overall weighted average investment company ex VCTs £10,941 £31,933

Source: AIC/Morningstar

Lump sum investing with investment companies to 30 November 2018

  £1,000 lump sum over past 10 years £1,000 lump sum over past 18 years
Sum invested £1,000 £1,000
Overall weighted average investment company ex VCTs £3,711 £4,107

Source: AIC/Morningstar

Investment company children’s savings 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 N/A. Purchase: £9.99 (online), £50 (phone & post). Sale: £9.99 (online), £50 (phone & post). Transfer out: £60+VAT. Regular dividend reinvestment: £5.00. Regular buy (direct debit - post): £5.00. Regular buy (direct debit - online monthly dealing service): £1.50. Switch: N/a
Baillie Gifford Savings Management £25 £100 Initial/Admin: Nil. Annual: Nil. Purchase: Nil. Sale: £22. Transfer out: N/a. Switch: Nil.
Dunedin (through Alliance Trust Savings) £50 £50 Initial/Admin: Nil. Annual: £10 per quarter. Purchase: £9.99 (online), £50 (phone & post). Sale: £9.99 (online), £50 (phone & post). Transfer out: £60. Switch: N/a.
BMO Global Asset Management £25 £250 Initial/Admin: Nil. Annual: £25. Purchase: £8 (online), £12 (post). Sale: £8 (online), £12 (post). Transfer out: £12. Switch: Nil.
Martin Currie (through Alliance Trust Savings) £50 £50 Initial/Admin: Nil. Annual: £10 per quarter. 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

Investment company Junior ISAs

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 N/A. Purchase: £9.99 (online), £50 (phone & post). Sale: £9.99 (online), £50 (phone & post). Transfer out: £60+VAT. Regular dividend reinvestment: £5.00. Regular buy (direct debit - post): £5.00. Regular buy (direct debit - online monthly dealing service): £1.50. Switch: N/a
Baillie Gifford Savings Management £25 £100 Initial/Admin: Nil. Annual: Nil. Purchase: Nil. Sale: £22. Transfer out: N/a. Switch: Nil.
Dunedin (through Alliance Trust Savings) £50 £50 Initial/Admin: Nil. Annual: £10 per quarter. Purchase: £9.99 (online), £50 (phone & post). Sale: £9.99 (online), £50 (phone & post). Transfer out: £60. Switch: N/a.
BMO Global Asset Management £25 £250 Initial/Admin: Nil. Annual: £25. Purchase: £8 (online), £12 (post). Sale: £8 (online), £12 (post). Transfer out: £12. Switch: Nil.
Martin Currie (through Alliance Trust Savings) £50 £50 Initial/Admin: Nil. Annual: £10 per quarter. 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

-Ends-

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Notes

  1. Data source: AIC/Morningstar.
  2. Performance is investment company overall weighted average (ex. VCTs) % share price total return. 18-year performance is from 1 December 2000 to 30 November 2018. 10-year performance is from 1 December 2008 to 30 November 2018.
  3. Information on children’s savings schemes and Junior ISAs is submitted by investment companies and may not be exhaustive.
  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 355 members and the industry has total assets of approximately £182 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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Annabel Brodie-Smith
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Tel: 020 7282 5580
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