A recent study conducted by Kantar Sifo Prospera on behalf of the Swedish Investment Fund Association has revealed that among those saving for their children’s future, funds are the most popular investment choice. According to the survey, 72% of parents are investing in funds, while 45% are opting for savings accounts and 16% are directly investing in stocks.
The breakdown of fund investments varies, with 49% of respondents indicating they invest in equity funds, 46% in mixed funds, and 13% in bond funds. Surprisingly, 17% of participants admitted they were unsure of the type of fund they were investing in for their children’s future.
Rebecca Jansson, a fund economist at the Swedish Investment Fund Association, emphasizes the importance of being comfortable with the level of risk involved in one’s savings strategy. She points out that historically, the stock market has provided the best returns over the long term.
“When it comes to children’s savings, it’s usually a long-term commitment. This is where considering equity funds can be beneficial, as otherwise, you may miss out on potential returns. Long-term investments also benefit from the compounding effect over the years,” Jansson explains. She adds, “While equity funds may experience short-term fluctuations, enduring these ups and downs can lead to a profitable investment in the long run.”
Diversifying risks is another key factor to consider in children’s savings. It’s essential to spread risks across different asset classes, regions, and sectors to mitigate potential losses. However, the most effective strategy is to maintain discipline in savings habits.
“Consistent saving is crucial as it helps spread the risk. By investing during both market upswings and downturns, the overall performance becomes more stable over time,” Jansson advises.
Jansson also commends Swedes for their strong commitment to savings, despite facing challenges like high inflation, rising interest rates, and economic downturns in recent years.
“Although there has been a slight decrease in the percentage of parents saving for their children, the fact that 85% are still doing so is commendable. Despite economic uncertainties, many continue to prioritize saving for their children’s future, aiming to provide them with sound financial foundations as they grow older,” Jansson notes.
In conclusion, the findings of the study highlight the importance of thoughtful and disciplined savings habits, especially when it comes to securing a bright financial future for the next generation. By making informed investment choices, diversifying risks, and staying committed to regular savings, parents can pave the way for their children’s long-term financial well-being.