Adults holding cash ISAs are almost twice as likely to open a junior cash ISA for their children compared to a junior stocks and shares ISA, the Investment Association has found.

The association’s latest survey with Opinium found that 17% of cash ISA holders are likely to open to open a junior cash ISA for their child, compared to 9% who would open a junior stocks and shares ISA.

The Investment Association said that many savers are "missing out on the long-term growth a junior stocks and shares ISA could offer".

The association revealed that the top motivations for parents saving into a junior cash ISA are education (55%) and getting on to the property ladder (37%).

For those saving into a junior stocks and shares ISA, the top motivations are education (49%) and buying a first home (38%).

However, the difference in these ISAs is apparent in their long-term growth. If £9,000 was put into a junior cash ISA 18 years ago, it would now be worth £7,453 today in real terms, adjusting for inflation.

If the same amount had been invested in a typical global equity fund via a junior stocks and shares ISA at the same time, it would be worth £20,802 today.

Of those parents only saving into a junior cash ISA, 62% do so because they find the product easier to understand compared to a junior stocks and shares ISA.

Furthermore, 74% of parents who have invested in junior stocks and shares ISAs believe that doing so will give their child better long-term return than a junior cash ISA, which the Investment Association said highlights "a potential investment gap".

Chief executive officer at the Investment Association, Chris Cummings, said: "Making use of the tax-free savings available through a junior ISA is a great way to set your child up for later life, whether that’s funding education or training, getting a foot on the property ladder or starting a family of their own.

"Many parents are already taking advantage of junior ISAs, but we would like to see more benefit from long-term investment through the junior stocks and shares ISA. That’s why we’re calling on the government to introduce more effective financial education throughout life so that concepts including the power of compound growth and inflation risk are better understood, and families are set up to make informed financial decisions that benefit their futures."

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