Christmas comes but once a year. But for families who want to add a little balance to the mountain of presents and include something with a more enduring shelf-life, investment companies could be worth considering.

Long-term potential

Investment companies have become extremely popular when it comes to saving for children, allowing parents to tap into the long-term potential of the stock market. A lump sum investment of £1,000 made 18 years ago in the average investment company would now be worth £4,240 to 30 November 2013. A £50 a month investment over 18 years in the average investment company would be worth £26,171 at 30 November 2013.

Annabel Brodie-Smith, Communications Director, Association of Investment Companies (AIC) said:

Christmas wouldn’t be Christmas without an abundance of toys, but we are all aware of the limited shelf life of some presents that are opened and quickly forgotten. So it’s perhaps not surprising that some people want to make a more lasting contribution to their child’s savings.

Investment companies give investors access to the long-term potential of the stock market. By investing in a range of companies on your behalf, they spread your risk and offer professional fund management. They have some unique characteristics that have contributed to generally strong long-term performance. For example, if you had invested the current annual Junior ISA limit of £3,720 in the average investment company eighteen years ago you would now have £15,763. If you had been able to invest £3,720 each year over 18 years, you would now have a staggering £170,766.

Investment Company Junior ISA Providers

AIC Childrens saving Dec 2013

Investment Company Children’s Savings Scheme Providers

AIC Childrens Savings Dec 2013-2

Find out more on saving for a child by reading this factsheet on Investing for Children, available on the AIC’s website, www.theaic.co.uk.

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