As Christmas approaches, many families are thinking about how to give a gift that could genuinely support a child or grandchild’s future. With the rising cost of university, housing and other first steps into adulthood, it’s increasingly clear that the financial demands young people face are rising.
With costs like these ahead of them, even a small investment started today could become a significant source of support when those milestones eventually arrive.
Children also have one advantage adults rarely do: time – time for small amounts to grow, and time for long-term investing to work on their behalf.
Keeping money in cash is useful in the short term, but over many years inflation quietly reduces what it can buy. For goals that are still a decade or more away, growth matters more.
That’s where compounding comes in – the effect of growth building on growth over long periods. When an investment has many years to run, even small, regular contributions can build into something meaningful by the time a child reaches adulthood.
This is why it can pay to look beyond cash to investments with room to grow – and emerging markets offer some of the strongest growth potential.
Children won’t build their futures in the global economy of the past. They’ll be adults in a world where emerging markets are expected to drive nearly three-quarters of global growth, powered by rising incomes, expanding middle classes and rapid innovation.
Countries such as India, South Korea, Indonesia, and Brazil are home to many of the companies likely to shape the next economic cycle. For long-term investors – particularly those investing on behalf of children – these regions offer exposure to the growth of tomorrow.
The Templeton Emerging Markets Investment Trust (TEMIT) provides a straightforward, professionally managed way to invest in these fast-growing economies. Its portfolio focuses on high-quality businesses with strong financials and the potential to compound value over time – a natural fit for a child’s long investment horizon.
The chart below shows how TEMIT has delivered stronger long-term returns than both UK equities and cash savings – underlining why relying solely on cash may not be enough for goals many years away.
Source: Morningstar Direct
Past performance is not a guide to future performance. Find out more about TEMIT’s performance at Templeton Emerging Markets Investment Trust - TEMIT.
TEMIT’s long-term record helps show how powerful compounding can be:
These examples show how long-term investing can build into support that really matters by the time those big life moments arrive.
TEMIT can be held through most investment platforms or within a Junior ISA, allowing any potential growth to build free from UK income and capital gains tax.
This Christmas, a small investment could give the children in your life a meaningful headstart towards life’s biggest milestones – a gift that grows with them, long after the decorations are put away.
Shares in TEMIT qualify as an investment which can be held through an ISA. TEMIT is available through a stocks and shares ISA from a number of different companies. Your financial adviser will be able to give you full details of the options available to you.
What are the key risks?
The value of shares in the Templeton Emerging Markets Investment Trust PLC (TEMIT) and any income received from it can go down as well as up and investors may not get back the full amount invested. There is no guarantee that TEMIT will meet its objective. TEMIT invests in equity securities of emerging markets companies. Emerging markets have historically been subject to significant price movements, often to a greater extent than more established equity markets. Performance may also be affected by currency fluctuations.
As a result, the share price and net asset value of TEMIT can fluctuate significantly over relatively short time periods. Other significant risks include borrowing risk, derivative instrument risk and share price discount to NAV risk. Past performance is not an indicator or a guarantee of future performance.
For more details of all the risks applicable to TEMIT, please refer to the Key Information Document, Investor Disclosure Document and the risk section in TEMIT’s Annual Report, which can be downloaded from our website www.temit.co.uk/resources/literature .
Important Information
This article is intended to be of general interest only and does not constitute legal or tax advice nor is it an offer for shares or invitation to apply for shares. Nothing in this document should be construed as investment advice. Opinions expressed are the author(s) at publication date and they are subject to change without prior notice.
Subscriptions to shares in TEMIT can only be made on the basis of the Investor Disclosure and Key Information Documents, accompanied by the latest available audited annual report and the latest semi‑annual report if published thereafter.
Any research and analysis contained in this article has been procured by Franklin Templeton for its own purposes and is provided to you only incidentally. Data from third party sources may have been used in the preparation of this article and TEMIT has not independently verified, validated or audited such data. References to particular industries, sectors or companies are for general information and are not necessarily indicative of TEMIT’s holding at any one time. References to indices are made for comparative purposes only and are provided to represent the investment environment existing during the time periods shown. An index is unmanaged, and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. Important data provider notices and terms are available at www.franklintempletondatasources.com .
