Junior ISA investments reach three-year high as households prioritise saving for their kids

  • Number of junior stocks and shares ISA policies opened in Q3 2022 rose 48% year-on-year/li>

  • In contrast, sales of adult investment ISA policies are down 22%

New figures from financial mutual Scottish Friendly reveal a record number of Junior ISA investments were made in the third quarter of 2022, despite households having less money to save.

Data from Scottish Friendly’s latest Investor Index shows that the number of junior stocks and shares ISA policies opened in the three months to September rose 48% year-on-year to reach their highest level since the Index was first produced in 2019.

However, the average value of these new JISA policies fell 38% year-on year in the third quarter, which suggests that despite a growing commitment to save for their children’s future, families have less money to invest.

Inflation is the most likely cause, as it has risen from just 2% at the start of Q3 2021 to 10.1% in July 2022, eroding a significant portion of what households can afford to save.

Recent forecasts from Scottish Friendly and the Centre for Economics and Business Research (CEBR) estimate that families saved an average of just £17 per week in Q3 of this year, a drop of 74% compared with Q3 2021.

The research also found that real savings returns reached their lowest level since 1976 last quarter as they fell to -9% in July 2022.

This has coincided with the growth in the popularity of junior stocks and shares ISAs, but in sharp contrast to this, adult investment levels have dropped.

Between Q3 2021 and Q3 2022 Scottish Friendly’s new policy sales for its adult investment ISAs were down 22%, while investment values fell to their lowest level since 2019.

Kevin Brown, savings specialist at Scottish Friendly, comments:

Households are walking a tight rope - balancing the rising cost of living with securing their children’s finances.

The sum of money that households have available to save or invest has shrunk significantly over the past 12 months, as their outgoings have shot up.

But what is encouraging is the growth we have seen in the number of Junior ISA investments, which shows no signs of slowing.

Investing little and often – small amounts of money on a regular basis – may be more achievable for a lot of families at this moment in time.

One of the common myths about investing is that it is only for the wealthy and well-advised, but it doesn’t need to be large sums, by drip feeding as little as £10 a month, investors can find that the pounds could soon start to add up.

We want to support as many families as possible to achieve financial security and prosperity, and these latest figures are a positive sign that although times might be hard. people are on the right track.

1.The Scottish Friendly Investor Index tracks sales of the company’s junior and adult investment ISA policies and the total values of these new policies among its UK-wide customer base with quarterly activity measured against a base rate of 100.