November 11th, 2021 | Andrew Hagger | News

• Almost one-third of people said they would rely on their partner’s pension in retirement. This includes 23% of men and almost 40% (39%) of women.
• One fifth (21%) of people were unsure if they would have to rely on their partner in retirement.
• Almost one quarter (24%) of the 18-24 age group said they thought they would have to rely on a partner’s pension while 43% said they wouldn’t. Older age groups were less confident with 36% of 35-44-year-olds saying they thought they would rely on their partner.
• London topped the poll with over half (53%) of people saying they expected to rely on their partner’s pension. This compares to just 23% of people in the North-West.

Survey of 2,000 people carried out by Opinium on behalf of HL in September 2021.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

“Telling a happy couple to consider their finances in the event of a split is hardly romantic but could save a lot of financial heartache in the long run. While it makes sense for couples to share financial responsibilities, leaving long term planning such as a pension primarily in the hands of one partner could leave you financially vulnerable in later life.

If your partner has a much better pension than you then it is tempting to rely on that rather than build your own, especially if you’re on a lower income. However, if you choose to take this approach, you need to understand the risks you’re taking.

If you’re not married, then in the event of a split, you won’t be entitled to a share of the pension at all. If you are married, then within a divorce, women tend to leave with less than half of the pension. This is often because women will offset it in an effort to keep the family home, especially if they have primary responsibility for the children. However, this could leave them with a massive hole in their retirement finances.

Even if you stay together, you need to consider the practicalities of sharing one income, managed by one of you, especially if you have different financial priorities. Often both of the couple will want the security and independence of their own income.

The figures show women are particularly at risk, with almost 40% saying they expected to rely on a partner’s pension in retirement. This is down to a variety of factors including lower wages, part-time work, and time out of the workforce for caring responsibilities. However, almost a quarter (23%) of men also said they would likely need to rely on a partner’s pension so it’s by no means purely a female thing.

The good news is that younger age groups feel they will not have to rely on their partner so much. Only a quarter of the 18-24 age group said they thought they might have to rely on a partner. However, we need to bear in mind that for many of them, the years where their finances will be severely squeezed are ahead of them. Auto-enrolment means more people than ever will be able to build up a pension throughout their working lives meaning they are less likely to have to rely on anyone else in retirement.”

Tips to boost your pension

1. Increase your contributions whenever you can – we have many different demands on our money but making small contribution increases, for instance when you get a pay rise, can have a big impact on the value of your pension pot.
2. Get more from your workplace pension – while many employers will only pay the minimum contributions for auto-enrolment there are others who will increase their contribution if you boost yours. Over time this can have a significant impact on the value of your pension so be sure to ask your HR department if this is available.
3. Missing pensions – the average person is likely to accumulate several pensions over their working life and it can be easy to lose track of them and this means you don’t get the pension income you are entitled to. Be sure to give your pension providers up to date contact details when you move to a new house to make sure you receive all the documentation you need to keep up to date. If in doubt the government’s Pension Tracing Service Find pension contact details – GOV.UK (www.gov.uk) can help you track down any lost pensions.

November 4th, 2021 | Andrew Hagger | News

A significant proportion of young people are prepared to turn away from traditional pensions to invest in cryptocurrency, stocks and shares ISAs or other investments instead, reveals a new poll of 2,000 UK adults.

The new study for independent price comparison site NerdWallet reveals that almost a third (31%) of young people aged between 18 to 24 years old would rather invest in cryptocurrency than save into a traditional workplace or personal pension.  This is despite the extreme risks often associated with investing in cryptocurrency, made clear in a recent scam at the expense of unsuspecting investors.

Interestingly, while there appears to be a strong appetite among young adults to invest in cryptocurrency, over a quarter of young adults (26%) said that they are reluctant to save into a pension because of the risks involved. This is despite the cryptocurrency industry being vulnerable to scams, often using social media influencers that target a younger audience. When it comes to pensions themselves, only 21% of 18- to 24-year-olds surveyed said they understand the risks of the funds in which they invest which suggests that there is limited awareness of the risks involved in both.

The workplace pension is much less popular with this generation, with over a third of young people thinking that it is more important to invest in stocks and shares ISAs (36%) or cash ISAs (35%) than to contribute to a pension or sort out their finances for retirement. This contrasts with 7% of 45–54-year-olds that favoured stocks and share ISAs and 14% that favoured cash ISAs or savings accounts. A further 28% of the study’s 18-24 respondents have already chosen to opt out of their workplace pension to save money in other ways – while 23% have decreased their pension contributions over the last 18 months.

The research also looked at where retirement planning ranked among other financial priorities, with one in three (34%) young people saying that it would be more important for them to pay off a mortgage early than to start saving into a pension. With pension planning seemingly not a priority for many young adults it is perhaps unsurprising that 82% of 18–24-year-olds have not yet worked out how much they would need to save for a comfortable retirement.

With cryptocurrency investment becoming increasingly interesting for young people, and retirement less prioritised, this could suggest that young people are more interested in instant gratification and quick wins over long-term investment when it comes to personal finance, regardless of the risk. 34% simply said that they would rather spend the money they have today than think about saving for tomorrow, while 30% said that they do not believe that they could afford to make regular pension contributions due to a lack of disposable income.

Meanwhile, 29% also said that they do not plan on starting a workplace or personal pension as they think that the state pension will be enough to support them in retirement, while 24% said that they have put off sorting out a pension because they do not understand how it works.

Richard Eagling, Senior Pensions Expert at NerdWallet, commented: “The younger generation seem to be re-writing the retirement rulebook, with cryptocurrency a bigger draw than pensions for almost a third of young adults. Our survey shows that many youngsters are in danger of overlooking the unique advantages that pensions offer, in pursuit of the thrill of higher risk and potentially higher reward investments such as cryptocurrency. At the same time, a significant number of 18–24-year-olds are not engaging with retirement planning at all, or prioritising other financial goals. It is vital that young adults not only take steps to save for their retirement as early as possible, but also understand which products are most likely to give them the best chance of a comfortable retirement.”

October 29th, 2021 | Andrew Hagger | News

Money is something you simply can’t ignore, it’s essential to put food on your table, a roof over your head and to hopefully allow you to enjoy the lifestyle you work so hard for.

However, money matters can also prove to be very stressful, so it’s important to take control of your money and hopefully this will allow you to sleep better at night, knowing everything is in order.

Financial risks are everywhere and come in many shapes and sizes, affecting nearly everyone. You should be aware of the presence of financial risks. Knowing the dangers and how to protect yourself can help reduce the chances of a negative outcome.

managing the risk in our lives and managing our personal financial risk often overlap, although there are particular risks unique to finances that need to be understood and managed.

Keep a close eye on your credit score.

Checking your credit score on a regular basis not only means you will reduce the risk of fraudulent activity on your accounts, but it will also allow you to understand what lending products such as credit cards and loans are available to you.

 Don’t worry if your credit score is below average

Just because you don’t have a tip top credit score, it doesn’t mean you can’t borrow. Maybe you’re looking to finance a replacement car to help get you to work or get the kids to school – just because the big banks won’t lend to you it doesn’t mean there aren’t other options worth trying.

By making your credit card payments every month and on time will help improve your credit rating – set up reminders on your phone to ensure you don’t risk missing a payment – take control and that’s one less thing you’ll have to worry about.

Don’t automatically renew your car and home insurance

It’s the easy option just to renew your car or home insurance when the annual renewal drops through your letter box.

But this could mean you risk paying over the odds – simply tap your details into a comparison website and see if you can get a cheaper deal – you could be surprised how much you can save over a year.

 Try and get a better savings interest rate

Inflation or purchasing-power risk for most people is the “risk of avoiding risk” — this means the higher the rate you can earn, the less damage to your savings account balance from inflation. Rates aren’t great at the moment, but don’t let that stop you trying to earn more on your hard-earned nest egg.

Check that your home insurance gives you the cover you need

We try and reduce our risks by taking out insurance to cover us for those unexpected events or unfortunate accidents.

Unfortunately, many people don’t check the level of cover on their policy document until it comes to making a claim – and that can be too late.

Set aside 15 minutes to check your cover – look at the maximum value for individual items such as rings and jewellery as well as goods in your shed and possessions when away from the home.

If you don’t think your cover is adequate, contact your insurer sooner rather than later – you don’t want to risk being left to fork out hundreds of pounds out of your own pocket.

Consider a debt consolidation loan

Another alternative to help you manage your finances is to consider taking out a debt consolidation loan for bad credit. This is where you take out a loan to pay off your existing credit accounts, leaving you with only one monthly repayment to manage. It’s worth keeping in mind that whilst an unsecured debt consolidation loan can help you better manage your money, they can also extend the length of time in which you repay.

Author

This article was provided by Leah Cusick, a content specialist at Consolidation Express. A UK-based debt consolidation loan broker, the company – and its advisors – have a wealth of knowledge when it comes to debt consolidation for people that have bad credit. Get in touch if this is something you are interested in.   

October 28th, 2021 | Andrew Hagger | News

Claims for road accidents jump 8% in the week after the clocks go back, according to analysis of internal data by Tesco Bank Car Insurance. The findings are based on data from 2013 to 2019* which compares the number of claims in the week before the clocks go back, with the week after.

As we approach the winter months and the nights draw in, Tesco Bank urges drivers to take extra care on the roads and shares its tips on winter driving.

Julian Hartley, Insurance Director at Tesco Bank, comments: “It can take a while to adapt to the winter shift as the clocks go back. Arriving and leaving work in the dark, school runs done at dusk and evening activities under the glare of lights means that everyone using the roads needs to take a bit of additional care. Giving people extra time and space, making sure you are visible, and undertaking some vehicle maintenance are just a few simple steps that will reduce your risk of a winter collision.”

1. Leave some extra space

Weak light or glare from the sun setting at dusk, from about 4pm, can make some colours less distinct. Leave some extra braking distance between you and the vehicle in front so you have more time to react if you need it.

2. Check those lights

Ensure your lights are in full working order. Not only is it illegal to drive at night without fully functioning front and rear lights, it can also be incredibly dangerous. If you find any bulbs to be faulty, get them changed as soon as possible.

In terms of using your lights, though it may be tempting, do not use your full beams unless absolutely necessary and you are not faced with oncoming traffic as this can impair other drivers. The same applies for your interior lights. Ensure you are using dipped headlights for the rest of your driving in the darker hours, be this morning or night.

3. Keep windscreen and all windows clean

Dirt can build up quickly on autumn roads so pay extra attention to keeping all your windows and windscreen clean. You should also regularly check your screen wash, making sure it is sufficiently topped up before making any journeys. In the colder months windows are more susceptible to condensation so make sure you leave time to fully demist all your windows that need it.

4. Pay extra attention to other road users

Streetlights can cast shadows on roads, pavements or at road crossings which can hide pedestrians or cyclists. Take extra care on the roads, drive slower around schools and poorly lit areas, and make a conscious effort to double check for cyclists and pedestrians.

5. Get your eyes tested

The adjustment your eyes have to make, especially as daylight can turn to night so quickly, can be tricky, and, with the increased difficulty of driving in darkness, it would be wise to get your eyes tested to ensure you aren’t unintentionally causing potential danger to yourself or others.

6. Avoid driving tired

This applies all year round, but even more so now. You may have had an extra hour in bed, but we all know that doesn’t always leave us feeling fresher. Driving tired can put both you and other road users in jeopardy, so if you become tired while driving, stop, take a break and set off again when you feel safe to do so.

October 20th, 2021 | Andrew Hagger | News

Over-65s saw their property wealth increase by more than £800 a month in the past six months as the housing market benefited from the Stamp Duty holiday, analysis* from UK’s leading independent equity release adviser Key shows.

Over the past six months property owned outright by over-65s has increased in value by £24.225 billion which is worth an average £4,833 for each older homeowners.

Their total property wealth now stands at £1.256 trillion with all parts of Great Britain benefiting apart from London where property values fell as people looked to leave the capital and central London house prices underperformed. The biggest gains in the past six months were in Scotland and the South East with over-65s gaining more than £13,000 and nearly £12,000 respectively.

Long-term gains from property beat income growth

Since Key started analysing the mortgage-free property wealth of the over-65s in 2010 homeowners have seen growth of 61% – a total of more than £476 billion which is equivalent to around £95,000 per household over the past 11 years.

Over-65s have not seen the same boost to their incomes as they have seen to the value of their homes. Most recent Government data shows average pensioner incomes after housing costs only rising £12 to £331 per week – the equivalent of 3.7% – over the last 11 years**.  Pensioner couples have average incomes of £482 which is 6.8% higher than 11 years ago while single pensioners’ average incomes are 4.5% higher at £231.

The only region to see property values drop in the past six months was London where average prices are around £6,647 lower. All other regions saw growth of at least nearly £1,000.  More than a fifth of all property wealth held by over-65s is in the South East with the South West and East Anglia the next biggest regions for over-65s property wealth.

Will Hale, CEO at Key said: “The recent end of the Stamp Duty holiday may cool the property market somewhat but over-65s homeowners will continue to have a substantial amount of wealth tied up in their houses. This wealth can be accessed through products such as equity release and be used by older homeowners to address financial needs and wants through later life.

“The 61% rise in the property wealth of over-65s over the past 11 years dwarfs single digit increases in average pensioner incomes over that period and underlines the case for advisers and customers considering all assets when looking at financial planning at and through retirement.

“Equity release customers are increasingly using plans for a wide variety of purposes including securing their own retirement finances while also gifting money to family to help them on to the property ladder. Today’s modern equity release plans enable people to manage their borrowing in a flexible way and therefore to meet both needs and wants as their circumstances change through later life.”

October 15th, 2021 | Andrew Hagger | News

Car insurance premiums for young drivers aged 17 to 29  are falling, according to new figures from Quotezone.co.uk.

The car insurance comparison website recorded the largest decrease for the 17-21 age group with a drop of 14% in average premiums from 2020 to 2021 – from an average of £1,173 to £1,008 this year.

Quotezone.co.uk found that drivers aged 22-25 were now paying an average of 6% less for their cover – falling from £833 in 2020 to £783 this year.

The firm says its research, based on a sample of over 50,000 car insurance policies, shows that 17 to 21 year olds still pay an average of 38% more than other young drivers, and that new drivers across the 17 to 29 age group pay on average 53% more than experienced motorists.

Quotezone.co.uk’s research reveals that newly qualified motorists can expect to see their car insurance premiums drop by an average of 29% after they’ve been driving for two years with no insurance claims.

The insurance specialists say that there was a 12.6% fall in new younger drivers in 2020, and for motorists aged from 17-21 the drop was 42%.

Quotezone.co.uk’s Founder Greg Wilson comments: “Young drivers, particularly those aged 17 to 21, have had a tough year with driving lessons and testing on hold, and now delayed.  We expect the volume of young drivers to surge, once the queue for testing settles down, as people have had more time at home practicing their driving skills with friends and family.

“In terms of car insurance costs, it’s welcome news that premiums for this age range have fallen – it can often be expensive given their inexperience.  Average premiums start to fall by nearly a third as drivers gain more time behind the wheel – especially if they have two years driving safely with no claims made.

“There are things brand new drivers can do to help them find the most competitive quotes though, such as choosing a car with a smaller engine, avoiding modifications, parking in a garage or on a private driveway, and opting for a telematics product which allows them to showcase their safe driving right from the get-go.  Drivers can compare all these options on our comparison site, so they can see which providers are offering the best extras and the lowest cost.”

Quotezone.co.uk offers specialist cover for learner drivers, temporary learner insurance and for young driver insurance. It helps around 3 million users every year find better deals on their insurance, with over 400 insurance brands across 60 different products and is recommended by 97% of reviewers on Reviews.co.uk.

October 8th, 2021 | Andrew Hagger | News

Cryptic crypto

While its appeal may be evident to both existing and new investors, by its very nature crypto-investment has its complications – and implications when it comes to an investor’s tax obligations.

Jonathan Allwood, Personal Tax Manager at Bracey’s Accountants explains how cryptocurrencies and digital assets have gone from an obscure part of finance to centre-stage over the last year, attracting both institutional and personal investors.

The first challenge lies in the location of the asset. Crypto-assets are decentralised and digital in nature and, as such, do not have a physical location or exist anywhere. However, determining the location of assets is important for tax purposes and particularly for UK residents, non-UK domiciles as it can change the tax consequences dramatically.

HMRC guidance (note: this is not legislation) states that exchange tokens, which would include the likes of bitcoin, are located wherever the beneficial owner is resident. For UK residents, this means the crypto-asset would be treated as a UK asset.

For non-domiciled UK residents, however, the situation is potentially far more complex with greater permutations of tax consequences.

The second challenge lies with how gains on crypto-assets are calculated. Many crypto-assets are traded on exchanges that do not use pound sterling and it is also common to directly exchange one crypto-asset for another. Add into this the daily volatility in the crypto market, and actually valuing your crypto-assets on disposal can be tricky.

The key point here is that HMRC views different types of crypto-assets as separate assets for capital gains purposes. The swapping of your bitcoin for, say Ethereum, will trigger a disposal for capital gains tax purposes even if no traditional currency has been received. In this case, the individual investor would realise either a taxable gain or loss as a result and may need to make further disposals of crypto-assets into actual currency to meet their tax obligations.

Tax inevitability

While the market is nascent, many new investors may still be able to declare gains on crypto trading before the deadline or before HMRC make an enquiry into their tax affairs. As this is a growth market, it is not surprising that HMRC have already made steps to obtain information from trading apps and platforms regarding investors who have bought and sold crypto.

It is only a matter of time until HMRC are able to pursue investors that may have historical capital gains tax liabilities to declare. And with a January 2022 deadline to declare capital gains from investments sold before 5 April 2021, this may well happen sooner rather than later.

For amateur traders and investors, it is therefore now the time to ensure that they understand and seek trusted and expert advice on their tax obligations with regard to cryptocurrency trading, lest they incur unexpected penalties that eat into their much-prized gains.

October 7th, 2021 | Andrew Hagger | News

Over one in five (23%) people in the UK feel financially worse off than when the pandemic began, with two in three (68%) saying it’s negatively impacted their mental health, new research has found.

Among those whose mental health has been affected, the majority (67%) said they were anxious as a result of their fragile finances.

Yorkshire Building Society, who commissioned the research through Opinium, hopes people will use world mental health day as an opportunity to face their finances and take steps to review their money situation and reduce financial anxiety.

The survey showed almost half (49%) of respondents whose finances had been negatively affected this year felt depressed, and two fifths (43%) said they struggled to sleep. Others reported having mood swings (27%), feeling helpless (36%) and one in five (19%) said their work life had been disrupted as a result.

Tina Hughes, director of savings at Yorkshire Building Society, said: “This latest research is building on the indicators of the serious negative effect the pandemic has had on many people’s finances is leading to poor mental health and it’s important that’s not ignored. We don’t want people to suffer in silence and would encourage anyone who is feeling overwhelmed about their money situation to speak out – talk to someone they can trust, get in touch with the organisations involved with their money, or seek professional help from one of the many great charities available to help.”

Alongside research[ii] released by the Society in June highlighting the fragility of millions of people’s finances across the country with almost one in five (19%) UK adults having less than £100 in savings and the Society’s recent The Nation’s Nest Egg report released last month, consumers are currently facing a £371 billion savings shortfall when it comes to feeling able to withstand a financial shock.  The Yorkshire is encouraging customers who have concerns about their finances or experience health conditions that may affect their ability to manage their money, to have a confidential chat with its colleagues to help them better respond to specific needs people may have.

Tina added: “Whilst many people have managed to put away extra savings throughout the pandemic, this latest research clearly shows that different pockets of society have been more impacted than others over the last 18 months.

“For some of those that have struggled during the pandemic and are now confronted by a cut to universal credit, a record breaking jump in inflation in August and rising energy and food prices, the picture this winter is bleak.

“As a society, we are committed to helping support those who may be in financial difficulty, and this year partnered with Citizens Advice to launch an innovative pilot to ensure that we can get financial advice to some of those who need it most. We understand the strain that money worries can have on people’s wellbeing, and so we want to help alleviate this strain for as many people as possible.

As part of Yorkshire Building Society’s commitment to helping people build their financial resilience, the Society fund Citizens Advice advisers to hold free, confidential appointments at least one day a week across  six Yorkshire locations.

The appointments are open to everyone in the community not only Yorkshire Building Society customers. The Citizens Advice advisers will offer independent advice in private meeting rooms to assist people with a wide range of issues, including financial wellbeing.

If you or anyone you know is struggling financially, help can be sought at Citizens Advice. Practical advice for those unable to pay bills or struggling with debt can be found at www.citizensadvice.org.uk or over the phone on 0800 144 8848.

Additionally, Yorkshire Building Society has a range of support tools available to help people build their financial resilience and take practical steps to saving more.  To find out more or to read the full Nation’s Nest Egg report, please visit the Society’s Money MOT hub.

October 6th, 2021 | Andrew Hagger | News

Aldermore Bank and Cashplus Bank have today announced an exclusive partnership which delivers an easy to manage business savings solution for time-poor SMEs with returns 50 times that of those offered by the largest high street banks¹.

Cashplus selected Aldermore as the best partner for their 150,000 business customers for the highly competitive proposition they offer, great rates, fast onboarding process and ease of managing business savings 24/7 with no fees or charges.

Cashplus Bank customers will be able to open an Aldermore savings account with as little as £1,000 and link their Cashplus current account to their Aldermore savings account, allowing for easy mangement, deposit and withdrawals.

Cashplus allows SME customers to bank through their user-friendly digital platform, with a business current account opened in as little as four minutes. Cashplus business current accounts offer a range of benefits including 24/7 online and app access, safe and secure banking with 24 hour fraud monitoring, alongside a range of other perks for fluid, fast and secure business banking.

Benefits of the partnership include:

• Competitive savings rates that allow SMEs to make the most of surplus business cash generating valuable income to support their business needs. For example, Aldermore’s easy access product pays £375 on a savings balance of £75,000 held for 12 months, compared to just £7.50 offered by many high street bank savings accounts, which is 50 times the return
• 24/7 online access to Aldermore’s Easy Access and Fixed Rate Business Savings accounts
• Peace of mind, with money up to £85,000 protected by the Financial Services Compensation Scheme (FSCS), the UK’s deposit guarantee scheme

Earlier this year, Cashplus Bank surveyed its business current account customers with nearly 65% expressing a preference for the type of easy access savings accounts offered by Aldermore Bank but lack the time to research the best provider or product.

Cashplus SME customers hold nearly £400m of deposits with the bank and the partnership announced today will allow those small businesses to make their money work harder for them, while minimising time consuming admin and removing the need to shop around, as they can be confident of a competitive rate.

Paul Schooley, Chief Commercial Officer, Cashplus Bank said: “We understand the challenges faced by SMEs, and we’re focused on constantly improving and building our business banking platform into the ultimate all-in-one solution for small businesses. We asked our business customers, and many told us they wanted the types of savings options that Aldermore offer to help make the best use of their surplus and saved cash. That’s why we’ve teamed up with Aldermore to help our customers enjoy the benefits of holding money in a business savings account, whilst still managing their day-to-day business banking with Cashplus Bank.”

Ewan Edwards, Director of Savings, Aldermore comments: “This partnership represents Aldermore’s ongoing commitment to backing SMEs so they can emerge from the pandemic stronger and focused on opportunities for growth.

“Running an SME comes with a whole host of challenges, so it is vital that business owners make their surplus cash work harder to provide additional financial support and to strengthen financial resilience. The relationship will allow Cashplus customers to make the most of their cash and receive a worthwhile return, all while benefiting from the high levels of service and convenience that Aldermore can offer.”

October 5th, 2021 | Andrew Hagger | News

Parents saving for their children in junior cash ISAs have missed out on up to £13.5bn in potential returns over the past decade.

A new study by Scottish Friendly and the Centre for Economics and Business Research reveals parents who saved into a cash version of the popular tax-free savings account have lost out on up to £32,300 each since they were launched in 2011.

Analysis shows that cash junior ISA holders who maxed out their annual ISA allowance every year since 2011 would have built up a pot worth £52,200 after depositing a total of £44,800.

But an individual who maximised their Junior ISA allowance with investments into the MSCI World Index via a stocks and shares JISA would have accrued a total of £84,500 – £32,300 more.

Since 2011, the MSCI World Index, a global equity tracker, has returned on average 6.5% a year when you take into account fees.

That is more than four times the 1.53% average annual return of cash junior ISAs over the same 10-year period.

Although cash junior ISAs rates have been higher than adult cash ISAs over the last decade, rates across the board have remained low ever since the financial crisis in 2007.

However, despite the potential for higher returns on the stock market, cash junior ISAs remain a far more popular option among parents. The number of account holders with a junior cash ISA has increased every year since they were first introduced, reaching 706,000 in 2019/2020.

By comparison, the number of stocks and shares JISA holders in 2019/2020 was just 317,000.

A survey of 500 junior ISA account holders carried out on behalf of Scottish Friendly found that 73% held a junior cash ISA only. It also revealed that adults on higher incomes were far more likely to invest into junior stocks and shares ISAs than those on middle and lower incomes.

More than four in ten (42%) people earning over £50,000 have a junior stocks and shares ISA compared to just 17% of those with an annual salary of less than £50,000.

The most common reason people gave for opening a cash junior ISA over a stocks and shares version was because they felt it was easier to manage – as selected by nearly a third (31%) of respondents.

Meanwhile, more than a quarter (27%) said it was because their money was more secure while 26% felt it was easier to set up than a stocks and shares junior ISA.

When respondents were asked specifically why they didn’t invest in stocks and shares ISA, the main reason given was because the charges are too high, cited by 16%, while 15% pointed to a fear of losing money.

In contrast, for those with stocks and shares JISAs, the main reasons for choosing it over a cash account were based on returns.

Over a quarter (27%) said it was because they expected higher returns, while 24% said it was to leverage the growth potential of the stock market and more than one in five (21%) said it was to protect against the threat of rising inflation.

Jill Mackay, head of marketing at Scottish Friendly, said: “For many parents saving for their children’s future is a major priority and giving them a helping hand as they start out in adult life is a big responsibility. Everyone wants the best for their child when it comes to building a nest egg so it’s understandable that many of us are tempted by a more cautious approach.

“However, if you’re putting money away for a child for up to 18 years, then it could make sense to consider investing as historically stocks and shares have proven to perform better than cash over the long term, albeit this is not guaranteed.

“Plus, investing isn’t just for the wealthy and well advised, it’s possible to invest from as little as £10 month. By investing even small amounts you could ultimately build a brighter start for your child.”