CASE STUDY: THE RANDOM FAMILY

How have cash, bonds and shares compared in the past?

To illustrate the different historic *returns* from these investments, this example shows the money two parents would have made for their three children – Joe, Tina and Diane – had the CTF been up and running since 1981. Assuming the Random parents invested each child’s £250 lump sum on the day of their birth, the table below shows how much each child would have received on their 18th birthday if their £250 had been invested 1) in *cash*, 2) in *bonds*, 3) in *shares* or 4) in a lifestyle plan.

It is also interesting to note the different amounts of money that each child would have received on their 18th birthday from investing purely in shares. Joe was born at a time when share prices were relatively low, and was lucky enough to turn 18 in the late-nineties, when share prices were relatively high. Tina turned 18 in 2002, when share prices had fallen considerably.  Diane's voucher was invested just before the market started falling and cashed in after both a huge drop and also a recovery in the market.

However, even though Diane was unlucky with the timing, she would still have received a substantial amount at 18 - well over double the amount she would have got had her parents saved her £250 in a savings account.

Please note that IMA’s factsheet is for information purposes only. It does not constitute advice. It simply aims to help you better understand the *risks* and rewards of *Investment Funds* and why they can help reduce the risk of loss through “*diversification*” (the spreading of your money across a range of investments). Money deposited in a bank or building society is relatively secure, whereas an investment involves stock market risk. This means that the value of your investment can go down as well as up. If you require any advice on investments, you should contact a *financial adviser*.