Investor Views: “How Do I Get My Children to Save?”

Private investor Michael Giess hopes the Junior ISA he has set up for his children will show them the benefits of investing

Emma Simon 19 April, 2017 | 12:16PM
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Until recently, Michael Giess, aged 44, was not confident investing his own money. Giess, a partner in a law firm, has a couple of shareholdings, but does not regularly manage them. The portfolio includes some HSBC (HSBA) shares that were gifted to him from his father.

It’s a lot better than we returns we were receiving on our cash ISAs

He says: “I’ve tended to sit on these and not really look at what they are worth. I’m hoping that over the long-term they will continue to grow in value, but I don’t monitor the share price on a day-to-day basis.”

Shares in this banking giant have a four-star equity rating from Morningstar analysts, reflecting the fact that the current price of £6.23 per share is below analysts’ fair value estimate of £7.20 per share.

Stephen Ellis, director of financial services equity research at Morningstar, describes HSBC as having a narrow moat; meaning it has modest defences against competitors in many of its key markets.

Ellis notes: “HSBC’s narrow moat is built on its nearly unparalleled global network whose geography covers 90% of global trade and capital flows. We think this gives HSBC the reach and scale necessary to serve international corporate clients in a way few other firms can rival.”

However Ellis points out: “This reach has increasingly been a double-edge sword in recent years. The ongoing global slowdown, along with divestitures, has caused revenue to slide since 2012, though we think 2017 will start to show signs of improvement.”

Cash ISAs Fail to Deliver

In the past, Giess, who lives in Shenfield, Essex, with his wife and two children, has opted for cash when it comes to tucking away his ISA allowance.

He explains: “In the past we’ve mainly invested in cash ISAs. Every year or so my wife and I would move them around to ensure we were getting the most competitive rate. But in recent years this has seen like a fruitless exercise with interest rates being so low. Even the best-paying account was giving us next to nothing on our money.”

Giess says he was aware that he should be investing his money instead, but was unsure which shares or funds to pick, adding: “There is quite a bewildering choice out there. I’d read various articles about different fund managers, but still wasn’t sure which one was the most suitable for me.”

Consulting a Professional for Pension Advice

Giess faced the same problems when it came to investing his pension. As he works for a small firm it fell to him to sort out his own pension plan. He says: “I had about four smaller pension pots and wasn’t particularly engaged with where they were invested, or how they were performing. A year ago I decided to visit a financial adviser for further advice, and now feel much happier about how they are doing.”

Following advice Giess has consolidated these pensions and they are now invested with Standard Life and St James’s Place. As part of this process he selected a number of funds that were appropriate to his risk profile. 

He says going through this process has encouraged him to be more pro-active with his other savings and investments.

Saving for the Next Generation

One of his first priorities was to start saving for his children, now aged 12 and 15. Giess says: “I’m conscious that in a few years they may be leaving home and heading off to university. Given the cost of this now, and the difficulties they are likely to face getting on the housing ladder, it seemed to make sense to invest for their future.”

Giess worries he may have left it “a little late” but hopes he will be able to save a reasonable sum over the next 10 years to give them a nest egg for when they leave higher education.

He has invested in an Orbis Junior ISA for each of his children. He says: “This was recommended to me by a family member. We started off splitting the money between their Global Balanced fund and Global Equity fund.

As the names suggest the Balanced fund is considered a slightly lower-risk mixed-asset option and has a greater weighting in bonds and other fixed interest investments. The Global Equity fund is 100% invested in equities. It is considered a higher-risk fund with 49% of the portfolio made up of in North American stocks and a 20% weighting in technology companies.

Both funds have a five-star rating from Morningstar, reflecting their strong outperformance versus peers in recent years.

Giess says: “After a period of time we noticed that the equity fund was performing better, so we have invested a second tranche of money solely in that fund.” Orbis charges a performance fee. This means that investors only pay a fee if the fund outperforms its benchmark, the MSCI World Index.

Giess adds: “After sorting out my pension and these ISAs, I’ve become more interested and engaged with my finances. I can see real-time information of how these investments are performing. I’m hoping this will encourage my children to take an interest, and perhaps tear themselves away from computer games!

“It acts as a positive reinforcement when you see the returns your money is making. It’s certainly a lot better than we returns we were receiving on the old cash ISAs.”

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
HSBC Holdings PLC671.10 GBX0.25Rating
Orbis OEIC Global Balanced Standard23.51 GBP0.43Rating
Orbis OEIC Global Equity Standard27.93 GBP0.69Rating

About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for

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