Best investments for children

Ok so heres the deal,

Ive been contributing $30/month since our kids were born plus depositing any monetary gifts into bank accounts for the kids. Upon review i realise that the interest rate is unlikely keeping up with inflation so want to shift this into something with a better return.

Was thinking of an index fund but seemed a real pain to setup.

Who has set something up similar and what did you do?

BTW there is about 2k each i have available and bumping contributions to $60/month/each

Thanks in advance

 

We purchased one Australian and one International ETF under our names and have it marked for the kids. We and they top up every 12 months or so.

 

Not an infrequent request ;

https://propertychat.com.au/communi...t-for-kids-aka-pocket-change.1422/#post-20374

 

Yes, there are ETF's listed on the ASX that may be a good alternative to getting the equities exposure you require (domestic and international). They would also typically pay you a dividend. Some have surprisingly low expense ratios for the diversification they offer.

 

I once read a story of a similar situation where parents wanted to help their children with investing money. Think it was along the lines of:

putting the funds into an offset account against non deductible debt. Say if loan is 4.5%, pay the savings from the offset back into the account for the children. Be more than they will get from the bank! Not sure on legalities.

Think in the one i read they paid the chilren say 3% and had a benefit themselves.

 

Chidren are harshly taxed on income. 66% So consider CGT deferred income...Longterm growth and gains rather than a income stream. If its your money then dont bother.

 

We set up a vanguard Australian shares index fund for both our kids. They are in my wife's name as trustee for the kids.

We received the baby bonus for both and invested that, the eldest is 7 now and it's more than doubled, we haven't been contributing either.

So pretty happy with it, set and forget.