Are Australian parents doing the best they can for their children’s financial future?
Parents feel they don’t know enough about share trading to invest in a portfolio for their children.
Nine out of ten Aussie parents are worried about the financial future of their children, with 78% particularly concerned that their kids will be forced to live pay cheque to pay cheque, according to Stockspot’s Future Affordability Report released today.
Over one-third (36%) of parents attribute the lack of decent part-time jobs as a key issue affecting young people's ability to save.
However, while parents overwhelmingly agree that the future financial independence of their children is a concern, opinion is split relatively evenly over who is responsible for giving young people a financial head start. Around one-third (31%) believe that it is the government’s role, while 26% say it is up to the kids themselves and 23% believe that parents are responsible.
The report revealed that if parents were to start a saving strategy for their children, the majority (68%) would put money into a bank account, while only 13% would put money in a share investment portfolio, despite historically better returns.
“Putting money in a bank account is certainly a wise thing to do, but parents who avoid investing miss out on the benefits of compound returns,” said founder and CEO of robo adviser Stockspot Chris Brycki.
“An investment of $2,000 in a high-growth portfolio and regular top-ups of $100 a month at an average after-tax return of 7% per year would result in $60,000 in 20 years. This is compared to today’s average bank interest rate of less than 2%, which would achieve only about $32,500.”
Source: Stockspot Future Affordability Report
Over half of Australian parents feel they cannot invest in a share portfolio for their children because they lack the money required to do so and a third are discouraged because they feel they don’t know enough about investing.
“Education is vitally important. Too many parents think that they ‘don’t get it’ and don’t teach their children about the value of compound returns. Or they think it’s too risky because they had a bad experience stock picking,” said Brycki.
“Digital investment services can now spread investments across thousands of companies from Australia and around the world to reduce risk.”
“It’s never too early or too late to start saving and investing. Technology has made saving and investing easier than at any other point in history. The opportunity is there, parents just need to take it”.
If you’re keen to start investing in shares with the help of a robo-adviser, check out our comprehensive robo-advice guide as a first step.