• 29% of people who save or invest on behalf of children normally do so at Christmas time, according to YouGov SixthSense
  • Parents and grandparents, family and friends making regular contributions
  • Which are the top performing investment companies over 18 years?

With costs of university and living still rising, those considering saving for children and grandchildren this Christmas will see financial gifts gratefully received in years to come by young adults ready for higher education or their first home.

Whilst we all want to see children receive lots of toys, it seems that many people want to balance this with a gift that will last long after Christmas Day. According to recent research by YouGov SixthSense, 29% of people who save or invest on behalf of children normally do so at Christmas time. Some 71% of parents and 29% of grandparents regularly deposit money into children’s savings and investment accounts. But it seems that 14% of other family members, and 4% of family friends, are also contributing. Those considering saving for children might like to consider a collective investment scheme such as an investment company, which allows investors to tap into the long-term potential of the stock market.

Long-term potential

A lump sum investment of £100 made 18 years ago in the average investment company would now be worth £367. A £250 annual investment into the average investment company over 18 years, an investment totalling £4500, would have grown to £9508 to 31 October 2012, over double the amount invested. A £50 a month investment over 18 years in the average investment company would be worth £22,817 at 30 October 2012, over double the same amount invested in cash, £10,800.

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC) said: “We all want our children to wake up to lots of presents, but an investment made for them now can provide a welcome boost in the future. For parents, grandparents or even friends looking to contribute to long-term savings for children this Christmas, investment companies are a good way to do so.”

Any investment company can be used for investing for a child via a bare trust, a designated account or Junior ISA and there are a wide range of investment companies available that cover a variety of sectors, countries and risk profiles. Investment companies have many benefits including strong long-term performance, the closed ended structure and boards of directors to look after shareholder interests.”

Top performing investment companies over 18 years

Share price total return on £100 to 31 October 2012

Investment Company

Sector

18 years

Average investment company 366.77
Baring Emerging Europe European Emerging Markets 1429.69
HgCapital Private Equity 1111.05
Fidelity European Values Europe 860.27
Henderson EuroTrust Europe 856.03
TR Property Property Securities 816.11
Capital Gearing UK Growth 798.06
Graphite Enterprise Private Equity 762.4
JPMorgan European Smaller Companies European Smaller Companies 751.11
Northern Investors Private Equity 705.45
Invesco Perpetual UK Smaller Companies UK Smaller Companies 692.89
RIT Capital Partners Global Growth 688.67
Fidelity Special Values UK Growth 678.14
BlackRock World Mining Sector Specialist: Commodities & Natural Resources 653.14
Aberforth Smaller Companies UK Smaller Companies 639.32
Mercantile UK Growth 628.39
BlackRock Smaller Companies UK Smaller Companies 622.66
European Assets European Smaller Companies 621.25
Hansa Trust (A Ord) UK Growth 616.6
Lowland UK Growth & Income 591.47
British Empire Securities & General Global Growth 590.23

Share price total return on £100 to 31 October 2012 with 3.5% deducted for charges, stamp duty and market spread. Source: AIC using Morningstar.

Money by Ian Britton-FreeFoto.com

Money by Ian Britton-FreeFoto.com

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