My Money Week is happening this week – a national initiative that helps children and young people (ages 3 to 19) develop essential financial skills. Taking place from 9th to 13th June, this initiative is all about equipping primary and secondary students with the knowledge, skills, and confidence they need to manage money effectively and succeed in today’s world.
In celebration of My Money Week, Miranda Seath, Director of Market Insight at The Investment Association (IA), has shared her thoughts with us highlighting the importance of investing in building long-term financial resilience and how tax-efficient ISAs can help people to make the most of their savings:
“ISAs have been one of the great success stories of UK savings, helping millions of people across the country build financial resilience. However, our recent ISA Barometer research revealed that there is a lack of confidence and financial knowledge amongst UK parents when it comes to saving for their child’s future.
Although many parents are taking advantage of the tax-efficient Junior ISA, adults with Cash ISAs are nearly twice as likely to open a Junior Cash ISA for their children than a Junior Stocks and Shares ISA (17% vs. 9%). Whilst money in a Junior ISA belongs to the child, they typically can’t withdraw it until they turn 18, meaning savings could have a significant amount of time to grow.
Cash ISAs can be helpful for saving for immediate needs or building an emergency fund, but investing into a Junior Stocks & Shares ISA can offer stronger returns over a long-term period. For instance, £9,000 saved into a Junior Cash ISA 18 years ago would now be worth just £7,453 in real terms, compared to £20,802 if that money had been invested in a typical global equity fund via a Junior Stocks & Shares ISA.
Over half (60%) of parents choosing Junior Cash ISAs do so because they find them easier to understand, highlighting a significant knowledge gap that we risk passing on to the next generation. Demonstrating investment growth through a Junior Stocks & Shares ISA could be an important step towards passing on valuable knowledge to children about fundamental financial concepts such as compound growth, inflation risk, and the fact that ordinary people can participate in capital markets so that they can grow their investments to meet their long-term life goals.
The way we talk about money and finances can have a huge impact on our children. That’s why we’re working with the investment management industry to help to introduce a culture of inclusive investment in the UK, where people are empowered to make informed financial decisions.
The Investment Association is also a proud partner of the Just Finance Foundation (JFF), a charity committed to ensuring every child receives financial education for life. We continue to call for the government to implement more comprehensive financial education programmes, helping children to build strong financial skills from a young age and fostering financial wellbeing across the UK.”
