Parents who are worried about housing affordability and their children's financial futures are choosing bank accounts over share investment portfolios as the preferred savings vehicle.
A Stockspot report found 85% of parents worry their children will not be able to afford their own home, and 78% are concerned their children are living pay-cheque-to-pay-cheque. Yet the majority of parents willing to provide financial assistance would put money in a bank account (68%) over a share investment portfolio (13%).
Stockspot chief executive Chris Brycki said this shows a worrying trend among parents who are choosing to miss out of thousands of dollars in future savings.
"Saving early and frequently is the single most effective action a parent can take to help children get a financial head start," Brycki said.
"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."
"An investment of $2000 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 can be] compared to today's average bank interest rate of less than 2% which would achieve only about $32,500."
In the report parents cited a number of reasons to avoid investment portfolios, listing the perceived cost of investing as number one.
More than 50% of parents said they feel they cannot afford to invest in an investment portfolio, while a third claim they are put-off because they lack knowledge about investing, and 24% believe investing is too risky.
Brycki says while he understands the fears associated with investing, advancement and availability of digital investment services has significantly reduced the risks associated with investing.
"Too many parents think they 'don't get it', or they think [investing is] too risky because they had a bad experience stock picking," Brycki said.
"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".
The research was conducted by Galaxy Research on a representative sample of parents of children aged 17 years or younger. The sample comprises 1005 respondents, distributed throughout Australia including both capital city and non-capital city areas.