- The majority of UK parents/ guardians (76%) are saving for their children, but not enough doing so in stocks and shares meaning their money isn’t growing.
- Of those that are saving, 83% are doing so in cash, which could mean the real value could be falling due to the impact of inflation
- Nearly one in 10 (8%) don’t know where to turn to for advice
- Call for education: Overwhelming majority (66%) believe saving/ investment advice should be part of a community and paid for baby services such as NCT
- New NatWest Junior ISA aims to make investing more accessible for all
New research from NatWest has revealed that although 76% of parents and guardians across the UK are saving or investing money for their children, the overwhelming majority – at 83% – are doing so exclusively in cash, meaning their money may not be growing in real terms.
Peter Flavel, CEO Coutts & NatWest’s Wealth Businesses, said:: “It’s encouraging to see how many people are saving and investing for their children, but with so much of these savings being cash, the concern is that the customer isn’t aware that the impact of inflation means the purchasing power of these ‘safe’ cash balances actually goes back over the longer term. We want to play our part in informing those who are looking to make their money go further.”
The NatWest data also revealed that nearly one in five (18%) UK parents or guardians that are saving for their child is doing so by putting away cash in their own account, with 15% using NS&I Premium or Children’s bonds. Less than one in four (23%) UK parents or guardians is saving or investing for their child via stocks and shares.
Flavel commented: “We think that at least half, maybe even two-thirds of ISA balances ought to have been placed in competitively priced stock and shares ISAs, but the continued preference for cash suggests that ISAs aren’t really helping the UK’s medium-term savings pool in the way they best could.”
Unsurprisingly, the top reason as to why people aren’t saving for their child was because they couldn’t afford to – which was the case for 48%. But interestingly, nearly one in 10 (8%) simply didn’t know where to turn to for advice, and a similar number (7%) simply didn’t know how to do so.
As ever in financial services, trust is a significant influence on customer behaviours. While the NatWest data revealed that most parents/ guardians trusted a high-street bank’s saving and investment product, the fact is that around one in eight (13%) still do not.
For a quarter of Brits (25%), returns that make it worthwhile would convince them to start saving or investing for their child, with cheaper options (28%) the only higher answer. But interestingly, for roughly one in seven (14%) more advice on how to do so would help them do so. This, according to Flavel demonstrates that “the wealth industry must do more to educate customers and society about the benefits of investing, and also deliver low-cost and more flexible products to help people grow their savings.”
Indeed, financial education was something that the NatWest data unearthed was in much demand, with two-thirds (66%) of the UK’s parents and guardians declaring they think it should be part of a community and paid for baby services such as NCT.
To combat this saving and investing shortfall, NatWest recently launched a new Junior Stocks and Shares ISA for parents and guardians wanting an affordable alternative to cash savings to help save for their children’s future.
- Start from just £10 per month
- Invest up to £9,000 per tax year (as per current HMRC rules)
- No UK Income Tax or Capital Gains Tax on any returns
- Transfer Junior ISA or Child Trust Funds from other providers
- Five ready-made fund options managed by Coutts, with varying levels of risk
- Funds accessible by the child at age 18 with the ability to manage at age 16
Over the last year 650,000 NatWest customers started saving for the first time and earlier this year the assets under management across NatWest Group’s digital investing assets broke the £1bn barriers.
A Junior Stocks and Share ISA can be opened at any local branch, through the NatWest mobile app, or online at:
- NatWest – https://personal.natwest.com/personal/investments.html
- Royal Bank – https://personal.rbs.co.uk/personal/investments.html
Research carried out by Opinium on behalf of NatWest. Nationally representative sample of 2,012 parents of children under the age of 18