Parents saving into a Junior Isa (Jisa) have been urged to consider investing the money on the stock market after research showed 30 per cent expected the fund to be worth less than £5,000 by the time the child reaches 18.
A Willis Owen survey of 478 Jisa investors found 30 per cent expected the fund to be worth less than £5,000 when the child they are saving for turns 18, while one in five anticipated the funds to top £40,000.
A further 25 per cent expected a fund value of between £10,000 and £40,000.
According to Willis Owen, of those questioned, 27 per cent had opened a Jisa when the child was born with a further 20 per cent accessing one with the child’s first birthday.
More than a third of Jisas were opened when the child was aged between one and five.
Adrian Lowcock, head of personal investing, Willis Owen says: "There are over 900,000 JISAs in the UK, and it’s very encouraging to see that so many are opened before a child’s 5th birthday.
"However, given the money in these accounts cannot be accessed until the child reaches 18, most of those saving into Jisas need to take a long-term view. Despite this, the majority of Jisa money is in cash accounts as opposed to investments such as shares or funds.
"Furthermore, when asked about the risk profile of their Jisas, 39 per cent describe them as ‘very low’/’low risk’, and just 18 per cent as ‘quite adventurous’/’adventurous’."
The majority of those surveyed wanted the Jisa money to be used to pay for university and further education, followed by 43 per cent that said it would help to buy a property.
At the same time 42 per cent said they hoped that some, or all of the funds would remain invested.
Patrick Connolly, chartered financial planner at Chase de Vere, said: "The Junior Isa is the ideal way for many parents and grandparents to save on behalf of children to give them financial head-start as they move into adulthood. This is how I save for my son.
"While any savings are helpful, this research shows that 30 per cent of Jisa investors expect their investments to be worth less than £5,000 when the child reaches age 18.
"Parents and grandparents should ideally start saving as soon as possible, and while many don’t want to take big risks with children’s investments, if they are investing regular premiums over a long period they should be in the stock market."
