We all want to provide for our children, and there are many things that we can do that will help them all their lives. One is to teach them about the value of money and the importance of saving.

There is a quotation which goes: "Be a good role model. Children are more likely to be good savers if they see that their parents save regularly and find saving money to be worthwhile." It really does sound simple, doesn't it? Teaching our children to save and save regularly is one of the most important things we do for them. Certainly the best way to teach them is through setting a good example.

We can also invest money on their behalf. One of the best ongoing presents that you could give to your children is to invest some money for them that can be left undisturbed until they are adults. This will enable them to benefit from the miracle of compound returns. Imagine what would have happened if, when you were born, your parents had the foresight (and financial ability) to invest some money into the stock market on your behalf.

The long-term return on investing in the UK stock market has been around 11% per annum since 1918. So imagine if your parents had been able to squirrel away £100 into a (theoretical at the time) tracker fund when you were born. Suppose they had then added £100 each and every year until you were 18, and the historical 11% return had been achieved (less 1% for charges). It would have been worth about £5,000.

If they had then handed the fund, and you left it alone until you reached the grand old age of 50, a total outlay of £1,800 would be worth about £105,000. If you did not touch this money until you retired at the age of 65, then through the magic of compound interest this could be worth over £0.4 million -- on a total outlay of £1,800!

Now, OK, we recognise that this scenario is impossible in real life, as there will be issues of tax, both income and capital gains, to be contended with as well as the damage that would be caused by the ravages of inflation. But that should not detract from the wonderful gift that such an investment would have been; it does demonstrate the power of compounding over the long term.

You might think that investing your children's savings in the stock market is risky. But look at this table, which shows what would happen to an initial contribution of £100, invested at various growth rates.

The rate of 4% represents a typical interest-bearing account for children, while 8% represents what you might expect from a tracker fund, once the current low rate of inflation and charges are taken into account. The higher rate is for the ambitious stock pickers amongst you! Over time, the market has historically been the best place to put your money. The so-called "safest" investment vehicle -- putting your money in an interest-bearing bank account -- is in one sense the most guaranteed of them all to be a losing proposition, unless of course you simply stuff your savings under your mattress and watching it eaten away either by mice or by the sharp teeth of gnawing inflation.

Why is this? Because if you're getting, say, a guaranteed 4% a year, then you're missing out on the much greater growth that the stock market can give you. It's true that you're protected from losing your initial investment if you take the conservative bank account route -- but you're also "protected" from any major long-term investment returns.

Find out more in our Saving For Children centre.