The best way to invest for your grandchildren
GRANDPARENTS saving money for their grandchildren could boost their savings by up to 30 per cent if they choose to invest in the stock market rather than cash, according to new figures from Scottish Friendly. The analysis conducted by the Centre for Economics and Business Research for Scottish Friendly shows that a grandparent saving the maximum amount into a cash Junior ISA each year since 2011 would have made £2241 in interest in the past nine years. Grandparents who invested that cash in a stocks and shares JISA containing a fund mirroring the FTSE All Share Index instead would have made £2691 profit for their grandchildren in that time – £450, or 20 per cent, more. Kevin Brown, savings and investment specialist at Scottish Friendly, reckons it’s worth looking at. He said: “Many of us want to be able to help out children and grandchildren to have the best start in life by saving or investing for their futures. But at the same time the research suggests that many of us are not making our money work as hard as it could because we are wedded to the idea of saving into a poor-paying cash savings account. “Our research clearly shows that for those who want to maximise their grandchild’s returns, investing gives them more potential for growth for that money rather than keeping it in a secure savings account that is paying little over one per cent at best.”
Of course, as Kevin accepts, stock market investment isn’t without risk.
He said: “We know that part of the reason some people tend not to invest is because they feel they don’t know how or are afraid of losing money. That’s completely understandable.
“Perhaps the best way to get over that is to start investing little and often until you are comfortable with it. You may be surprised by how quickly your money could grow.
“Of course, history doesn’t provide us with certainty to make future decisions and the value of investments can go down as well as up, and you could get back less than you paid in.”