Parents are leaving their children out of pocket by keeping their savings in cash and missing out on potentially higher returns from investment.
Research published by provider OneFamily shows that 74% of all UK parents say they are saving for their children’s future.
Yet just one in ten parents are using a tax-free Isa to invest, with the majority keeping any nest egg in cash alone.
Just under half (49%) of parents have a standard children’s account while 26% have a cash Junior Isa. Around 15% have a separate account set up in their own name for their kids while 7% just keep cash at home.
Some 68% of parents admit that they are concerned about their children’s financial future. Of those who are able to save, the average parents save around £100 per month.
‘Parents should consider stocks and shares’
Yet OneFamily says that even small savings pots have performed better when invested. A £2,000 investment in its Junior Isa three years ago would now be worth £2,505, this compares to just £2,082 from the average children’s bank account.
Steve Ferrari, managing director of Junior Isas at OneFamily, says: “As our report has demonstrated there are plenty of ways to save for your children but if parents are looking for good, long-term returns then they should consider a stocks and shares Junior Isa.”