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Beyond saving - how to help your adult child fix their finances

Savvy investing for young adults

Young adults aren’t moving back home to get their washing done. For most, it’s a sensible move that’ll help them save. But relying on cash savings alone isn’t always the best financial option, especially with the rising costs facing young adults today. Two Aviva experts share their advice on how you can help your adult children make the most of their money.

The Institute of Fiscal Studies now expects graduates to finish their studies with student debt of more than £50,000 . This is just one way their pay needs to stretch further. And even if they didn’t go to university, young adults starting on the property ladder don’t have it easy. According to Halifax, the average UK house deposit is now £33,000 .

It’s no wonder young adults moving back home don’t expect to leave until their late twenties. 

During this time they’re likely to be saving hard, but they might not have considered investing in stocks and shares. Financial advice website bankrate.com found that millennials – young people aged 22 to 37  – are less likely to invest than older generations . 

Of course, savings are vital to cover unexpected costs – but investments have the potential to beat the rate of inflation. Together, they make great financial sense. 

Here’s how young adults can make investing work for them.

1. Use smart, simple products 

For the inexperienced investor, online platform Wealthify is a great first step, says John Lawson, our Head of Financial Research. “It effectively makes your investment decision for you by asking a few questions about how much money you’re able to commit, then building an investment plan.”

It’s great for young adults without experience of stocks and shares or the time to pay attention to markets, or even for those who just want to add to their current portfolio effortlessly. It's important to note that investors need to have 3 months’ salary saved before starting their portfolio, so it’s not a suitable option for those straight out of university – although it could be a great way for parents to invest any rent they might be charging their newly-graduated offspring.

2. It’s OK to start small 

Investing doesn’t mean committing all your money at once

says Alistair McQueen, Head of Savings & Retirement.

 “It’s all about flexibility. Starting is important, but changes can always be made at a later date."

“Modern savings and investment products like ISAs allow you to stop, start, increase, decrease or change investment options whenever you wish. So, they can start with a little, experiment with the way investment products work and commit more money as their confidence grows.”

3. Get information from the right sources 

“Google is the answer to so many things nowadays, but it’s easy to get lost,” says Alistair. “Start with government-backed website moneyadviceservice.org.uk. It’s designed, as the name suggests, to give people advice about how to manage their money – whether that’s investing, buying a property, managing debt or saving for retirement.”

John has some other suggestions: “Young adults just starting out should know that a lot that gets written about investment is not really factual, it’s all about what some person thinks might perform well in the future. I think for them, the best place to read about investments is probably the weekend papers. Picking up the FT on a Saturday would be worthwhile, or FT Money online.” 

4. Take advantage of tech

“It’s also worth pointing out that modern investment products have one big advantage over traditional methods,” says Alistair. “Today, we have the technology to make the entire process simple, transparent and accessible. 

“There used to be a letter once a year from your investment company showing how your money has performed. Now you can see on your screen exactly how your money is performing 24 hours a day, 7 days a week.”

5. Think of it as a learning experience 

John suggests that financially savvy parents could lend their time and experience to help adult children make the most of the savings from living at home. 

“If your son or daughter is putting £50 a month into an ISA or giving you money to save on their behalf, encourage them to see how it’s growing and compare it to how cash might have performed.” 

If you have a good understanding of how risk and reward works, you could share your knowledge to increase their confidence in investing. 

Remember, the value of the investment can fall as well as rise and could be less than you have invested.

Looking for ways to help your adult child reach financial independence? Learn how Wealthify can make investing effortless for you and your children, and get some advice from counsellor Janey Downshire on how to have those difficult conversations.

Looking to invest?

Visit our Investments page to see the different types of investment accounts we offer.