Savers lose £22bn by holding Jisas in cash

extra over the 18 years, ars, equivalent to £3,600 extra per er account, according to Brewin Dolphin.

Moreover, interest paid on cash Junior Isas has fallen as the Bank of England has cut rates. es. The Bank has raised the prospect ect of negative rates, so they could uld fall further still.

While the highest Jisa cash rate on offer today is 2.95pc, pc, from Coventry Building Society, iety, the same deal paid 3.6pc last year, ear, according to Moneyfacts, a data firm. m. The worst deal today, from Santander, pays just 0.75pc.

Alan Harvey of Brewin win Dolphin said opting for a stocks and d shares Isa had historically delivered d better returns than cash.

“While there are risks isks attached to stocks and shares, contributing ntributing regularly over the long term m has proven to smooth out the peaks s and troughs of markets, delivering returns eturns that outpace inflation,” he said. d.

While £9,000 is a lot ot for any family to save each year into a child’s savings pot, he suggested that contributions from grandparents could go towards the £750 monthly payments required to reach that amount.

If a family were to split the cost of £750 a month in three – between both parents and two sets of grandparents – it would take the cost down to a more manageable £250 each, he said.

Brewin Dolphin modelled 4pc returns, but investors might do better. The FTSE All- Share index of British stocks has returned 9pc a year since 1986, including dividends. International stocks have done even better at around 11pc a year since 1980.

The iShares UK Equity Index fund tracks the FTSE All- Share, costs just 0.06pc a year and features on the Telegraph 25 list of our favourite funds. One of the cheapest global stock market tracker funds is Fidelity Index World, which charges 0.12pc a year.

Active funds could do better still. Square Mile, a fund research firm, recommended the £275m Artemis Global Select fund, which has made investors around 13pc a year since its launch in 2011 and invests in companies from around the world. Square Mile also recommended the £2.3bn Liontrust Sustainable Future Managed fund, which invests globally in stocks and bonds that meet its sustainability criteria.

The fund has made investors 11pc a year in the past decade.

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Up to £9,000 a year can be saved in a Jisa for a child under 18. Capital gains and income are tax-free

Parents can choose a cash Jisa, which pays interest (currently around 2.5pc but rates can rise or fall as Bank Rate changes), or a stocks and shares Jisa

STOCK S MARKETS

Most stock st markets will lose money over the next seven years, an investment firm f has warned, as the post-2008 post-20 share price boom goes into reverse. reverse Investors can only protect their portfolio po by sticking to British stocks, GMO, G an American fund house, has pred predicted. The firm, fi which runs £45bn for savers, fo forecast American stocks would lose 6.6pc, and global shares 1.6pc, per y year for the next seven years, after accounting for annual inflation o of 2pc. Emerging market stocks would fall f 2pc and all types of bonds would lose value. One of the only investments investm that would make money was Brit British stocks, it said, rising 1.8pc per year. year The cheapest British “value” stocks, companies in out- of- favour sectors such as finance and oil, could

‘Only before the 1929 crash and the dotcom bubb bubble have stocks been more expensive’

make 3.6pc 3. a year, as could emerging market “value” stocks.

The r research looked at the historic valuations valuati of different markets as measured measur by share prices compared with earnings. ea It then calculated expected expecte returns if valuations return to normal norm levels within seven years. This is based on the idea that valuations re revert to the average over the long te term and the most hyped- up investm investments perform worse while the least popular po catch up.

Tommy Tomm Garvey, of GMO, said: “Earnin Earnings are normal at the moment but share prices are really high. Stocks have only been this expensive at the height of the dotcom bubble in 2000 and before the Wall Street crash in 1929. Eventually, prices and earnings will fall back into sync.”

However, Peter Oppenheimer of Goldman Sachs, the investment bank, said stocks were not in a bubble and low interest rates justified share prices. “While high valuations imply lower longer-term returns, they do not point to a valuation bubble,” he said. Sam Benstead