Grandparents give cash rather than invest for their grandkids’ future
It found when giving gifts to grandchildren under 18, grandparents preferred to give money ahead of clothes, toys, technology and entertainment, with 59% saying it was their preferred type of gift.
Grandparents, on average, gave all their grandchildren a total of £547 in financial gifts over the past year, or £209 per grandchild, the research from Orbis Access, an online investment company found.
Although 40% believed financial struggles or debt were the biggest threat to their grandchildren’s future happiness, their financial gifts tended to focus on the “immediate gratification” of their grandchildren rather than long-term financial planning.
Of the 2,000 surveyed, 62% said ‘cash is king’ and would rather give money directly than invest it on their behalf or give it to their parents.
Long-term saving and investment products are used by only a few, with just 12% paying into a junior ISA and 9% paying into other types of investment accounts like a Child Trust Fund.
Orbis Access estimated grandparents have gifted more than £6bn in cash to their grandchildren in the past year.
Some 59% of UK parents said they’d prefer their parents to give their kids money rather than invest it. One in five said they’d prefer the money to go in a junior ISA which their child can’t access until they’re 18.
Based on the average £209 given per grandparent, investing this as an annual contribution into a stocks and shares ISA on an assumed 5% average growth, could reach £5,880 over 18 years.
Dan Brocklebank, director of Orbis Access, said: “We know the UK’s grandparents are incredibly generous yet, their generosity often focuses on the here and now. Part of the joy of being a parent or grandparent is giving a child something that makes their eyes light up so we would never suggest that all gifts should simply be invested.
“But, there is an opportunity for much of today’s generosity to be channelled in a way that enables longer term benefits too. What’s more, their generosity could help to kick-start the savings habit from an early age, helping parents to save and invest for their children’s future.”