Students heading to university are heavily dependent on financial support from their parents and grandparents, according to the Association of Investment Companies (AIC)
Data from the AIC reveals that 71% of parents either contribute financially to their children’s university expenses or plan to do so, with an average annual contribution of £8,723. Wealthier parents contribute around £9,626 on average, while less affluent parents contribute approximately £5,639. Additionally, one in four parents report that grandparents also contribute, with an average yearly amount of £4,703, up from £2,455 in 2013.The AIC reports that funding university education remains the top financial priority for parents, with 46% placing it above helping their children purchase property (33%) and buying a car (10%). Students echoed these priorities, with 46% prioritising university costs, 28% prioritising a first property, and 14% prioritising a car.
The research also found that almost half (49%) of parents intend to use some of their cash savings for their child’s university education, and 16% plan to use all or most of their savings. Smaller percentages of parents have used investment trusts (16%), shares (15%), and funds (10%). The AIC noted that concerns about the risk of losing money, insufficient funds, and a lack of understanding of stock market investments lead parents to favour cash savings over stock market investments, despite 52% believing that stock market investments would yield better returns over a ten-year period.
Nick Britton, research director at the AIC, stated, “Millions of parents make significant financial sacrifices to send their children to university, and our research shows that many grandparents are contributing as well. It’s concerning that more parents aren’t leveraging the potential of the stock market to enhance their savings in the long term. While not everyone can afford to save, those who can typically choose cash savings accounts over the stock market, even though most parents acknowledge that stock market investments are likely to outperform cash over a typical ten-year period.”
Britton highlighted that an investment of £50 per month in an average investment trust over the past 18 years would have resulted in a total of £30,668, sufficient to cover the typical parental contribution for three years of university. Students heading to university are heavily dependent on financial support from their parents and grandparents, according to the Association of Investment Companies (AIC).
Data from the AIC reveals that 71% of parents either contribute financially to their children’s university expenses or plan to do so, with an average annual contribution of £8,723. Wealthier parents contribute around £9,626 on average, while less affluent parents contribute approximately £5,639. Additionally, one in four parents report that grandparents also contribute, with an average yearly amount of £4,703, up from £2,455 in 2013.The AIC reports that funding university education remains the top financial priority for parents, with 46% placing it above helping their children purchase property (33%) and buying a car (10%). Students echoed these priorities, with 46% prioritising university costs, 28% prioritising a first property, and 14% prioritising a car.
The research also found that almost half (49%) of parents intend to use some of their cash savings for their child’s university education, and 16% plan to use all or most of their savings. Smaller percentages of parents have used investment trusts (16%), shares (15%), and funds (10%). The AIC noted that concerns about the risk of losing money, insufficient funds, and a lack of understanding of stock market investments lead parents to favour cash savings over stock market investments, despite 52% believing that stock market investments would yield better returns over a ten-year period.
Nick Britton, research director at the AIC, stated, “Millions of parents make significant financial sacrifices to send their children to university, and our research shows that many grandparents are contributing as well. It’s concerning that more parents aren’t leveraging the potential of the stock market to enhance their savings in the long term. While not everyone can afford to save, those who can typically choose cash savings accounts over the stock market, even though most parents acknowledge that stock market investments are likely to outperform cash over a typical ten-year period.”
Britton highlighted that an investment of £50 per month in an average investment trust over the past 18 years would have resulted in a total of £30,668, sufficient to cover the typical parental contribution for three years of university.
Anna Griffiths – Clear Technical Manager
Diversification never goes out of fashion
What’s the most visible legacy of Covid in everyday life?
The odd mask still being worn on public transport?
A faded sign explaining, in intense detail, how to wash your hands?
A Perspex screen somewhere it really doesn’t need to be?
Or is it something else like office fashion?Pre-Covid office:
Post-Covid office:
The fact is that in the UK, men’s suits were taken out of the ‘representative’ inflation basket in 2022* . No-one is buying them, so they aren’t representative!
Imagine if you had the foresight on this trend in 2022 of the move towards casual and away from formal. Knowing this, if you had the choice of buying shares in athleisure super-brand Lululemon or ‘stuffy’ Marks & Spencer, which would you choose?
Now surprisingly, in the past couple of years, Lululemon’s stock has basically gone sideways, while M&S’s share price has doubled!!
Source: FactsetThe fact is that even if you know exactly what the world is going to look like, it doesn’t always translate to share price performance.
There are a lot of specific reasons Lululemon has struggled – there’s only so much money you can spend on tracksuit bottoms, clothes wear out less quickly at home, other brands have emerged to grab a slice of the market.
But the more interesting case is why M&S has thrived. As a business, it does something we think investors can learn from. It diversifies.
From food to clothing, to homeware, and even finance. So although their formalwear struggled, the rest of the business kept going, giving the fashion side time to adjust, ditch the formalwear, and evolve.
Mind the productivity gap
Productivity! A classic in election buzzwords. Everyone says it needs to be higher in the UK.
Interesting research in recent years comes from the Centre for Cities, which compares UK cities to European cities.Even though Leeds and Marseille have similar populations (800,000), Leeds has an output per worker of £45,000, compared to Marseille’s output per worker of £57,000. Marseille is nearly 25% more productive.This is true across regional UK cities with most underperforming their European equivalents in terms of productivity.
Productivity is simple to define – it’s the amount of output given a certain input.
Higher productivity means making more widgets in a day, or scoring more goals in a match, or selling more ice cream, without hiring more workers, or buying more strikers, or hiring more ice cream vans.
So how do you raise productivity? Basically, you have to make it easier for the same people to produce more! More OUTPUT, same INPUTS.
But how can you make life easier?
One way is to think about why Marseille might tick at a higher rate than Leeds.
Look at the population density maps below, which are on the same scale. Darker colour equals more densely populated:
This means that 87% of Marseille’s population can get to the centre in under 30 minutes, using public transport. Whereas in Leeds, only 38% of the population can do the same.
In people terms, that’s 400,000 extra Marseillais who can get to work easily, compared to Leeds. On average, only 40% of a UK city’s population can get into town in half an hour, vs. 67% across Europe.
And that matters hugely, in lots of ways.
For individuals, an easy and quick commute reduces stress, which leads to higher productivity and innovation.
For government investment, a more connected city wastes fewer resources; e.g.one big hospital is more efficient than ten small ones.
And for businesses, access to a wider talent pool in a smaller area allows rapid growth.
If the next government want to close the productivity gap, the public transport gap would be a good place to start …
Clear Team News – Louis Greening
Following on from the investment into Clear from the Swedish company Soderberg Louis has been offered a position with them as Sales Director.
It is a great opportunity for him as Soderberg is on course to be one of the top three Financial Services company in the UK within the next 3 years.
Louis has always concentrated on the investment part of our business and it is a huge opportunity for him to be with a company at the start of their journey. It is with sadness he will be leaving Clear and starting this new position with them. Over the last ten years he has managed Clear’s investment portfolios, continuously outperforming the respective benchmarks that we monitor. He will, however still be influential in our investment process on a consultancy basis with Mark Sherwood who is joining the team.
We are very grateful for his years of service helping to move Clear forward and wish him every success in his new venture.
Mark Sherwood
Mark has 40 years experience in the asset management sector, with a number of high profile firms including Schroders, Mercury Asset Management, Credit Suisse, Cazenove and Bordier & Cie.
The majority of his career has been in the wealth management sector, most recently as the main Board Director at Bordier & Cie (UK) PLC. He also managed the Smaller Companies Fund and the Recovery Fund at Mercury.
He will be a valuable addition to the Clear team.
Well done to our North Yorkshire police fundraisers who completed the walk of the Three Peaks overnight on Sunday 28th July.
So far they have raised £1900 for the charity!
Please consider donating to back these guys using the following link or QR code:
