Hi guys, I'd like to lean on some advise how some of you have potentially invested for some of your kids as young children, taking advantage of compound dividends and returns etc? At the moment, I have a 1 & 3 year old, with around $4k set aside for them and putting around $40 a week into a separate account. I've set up a discretionary trust. With myself, wife, kids in there, wife can recieve dividends and reinvest back in, as she is only part time at the moment. Was wondering what strategy some others have implemented? I could go down the path of cheap brokerage and just invest in say a few of the Commsec pocket options of IOZ, NDQ & SYI at $2 a trade on smaller blocks.. Or buy blocks of some of the Vanguard offers available for higher brokerage fee's when a block is saved up? Any other suggestions?
Taxation is the real issue here if it’s in their name. Have a look on the forum there are several threads on this. Options includes insurance bonds, DSSP and growth/low income stocks/funds. Funds like FGX and FGG and no brokerage if you are with CommSec, good for small regular parcels. Someone here on the forum uses this strategy, I cannot remember who though!
I once figured out that if each newborn baby was paid $10k into a superannuation account, along with regular super contributions during their working life, nobody would ever need a pension. Overall I think the best thing you can do for kids is to invest regularly for your own future and let them know what you're doing. Save money yourself, invest it and expect them to do the same. Educate them about investing. This has several long term outcomes. * Your kids will grow up with the expectation that they should invest right from the start. It will set up a generational expectation of wealth creation. We all know that poverty and a welfare mindset is generational, but so is a wealth mindset. * Your kids will have a solid foundation of knowledge to build on. By the time they're 18 they'll probably have seed money in the bank as well. * You'll be financially better off yourself and less likely to be a burden on your children in retirement. I've heard many times that people want to invest for their children. Whilst admirable, the best thing I believe you can give your children is the education and the expectation for them to do it themselves. Give them a hand up when you can, but you can't do it for them.
Thanks for the response. We Intend to do all of what you are saying, r.e education. We are essentially investing for ourselves, the intention isn't to invest in their names and to just give them the money. But to build a 'pool' of money do be able to help them out in their 20's & 30's for home deposits, investments of their own, to give them a leg up at their start of their own investment journeys. It's more so investing in a contingency pool of money so to draw on that won't impact on our own quality of life down the track...
Thanks for the resonse. The intention will be to buy blocks under a trust, disperse dividends to my wife who will be on reduced income for the next few years and begin growing the portfolio to a point they are in their mid 20's-30's and it can be distributed for their own investment beginnings. I intend to run a communist setup! All money, birthday money, xmas money etc go's into the pool and will be dispersed evenly between them when the time comes. So no intention to invest in their own names, just into the trust.
I found this document from Morningstar helpful in choosing how to invest for my young son: Investing for kids' education not as easy as ABC - Morningstar.com.au
