Seeking Advice: Best Investment Strategies for Securing Children's Financial Future

What are some effective strategies for investing on behalf of children to secure their financial future? Looking for insights and recommendations on the best investment vehicles and approaches for long-term growth and stability.

Would love to hear the approach you did with your children.

 

Some great ideas are listed here to get you thinking:

Investing for children – The ultimate guide — Passive Investing Australia

 

Invest for your self so that you can save tax and control the assets and improve your own financial situation so that you can help them later.

 

We have an IP set aside for each child, currently worth about $600k each. They are in a lower socio economic suburb, so not somewhere I envision the kids will live longer term. We are planning to use this as the basis to help the kids enter the housing market when they are young adults (another 10-15 years).

Options we've considered are:
1). Keep the IPs as they are. Sell when they are ready buy.
2). Sell the IPs (and pay CGT) and buy/build something in a more desirable suburb where they can live longer term. May require more capital.
3). Sell the IPs (and pay CGT), invest the circa $500k proceeds in ETFs. Sell ETFs when kids are ready to buy in 10-15 years.

We are looking to go with Option 3. I have a strategy to pay zero tax. $500k compounded at 8% annually for 15 years will net $1.6m if no CGT.

 

Marry rich

 

I opened 2 super fund accounts in our name and deposited $60k in each and treated as a concessional contribution. Invested 100% international index fund to minimise tax and maximise growth.

All gift money etc is contributed into there as well.

I can then withdraw tax free when they need it or use my funds outside of super to pass on housing etc.

 

Have you considered selling now to one of your child, without changing title, so any capital gain would go to them, you are triggering CGT for yourself but the payment can be delayed until settlement. There may be land tax benefits as well.

 

Thats a good one!

 

How would that work? Would the contract be dated today, with settlement date far into the future? Would the contact need to be lodged with the relevant authorities?

 

Tax Tip 339: CGT before Title Passes? Tax Tip 339: CGT before Title Passes?

 

Tax Tip 472: When do you pay CGT if Settlement of a Sale is in a Future Tax Year? Tax Tip 472: When do you pay CGT if Settlement of a Sale is in a Future Tax Year?

 

Greet strategy, I assume this requires a pension fund in order to draw the money tax free?

 

Great link you sent through Sgav, which strategy do you personally use?

 

Start an investment company with them.
Everyone is an equal share holder.
I provide the seed capital.

 

No kids yet, but I think it's hard to beat pumping $ into your super on their behalf, assuming you will hit 60 at a time convenient to them (e.g. 20-30 years of age).

Another good strategy is just sort your own ship out, build up your assets, then think about the Die With Zero approach of helping your kids when they need it, not just when you die. E.g. help them with a house deposit when they are 20 (say $100k of your funds) rather than them getting 1m of your assets when they are 60 and don't need it

 

My kids are less than 7, we look at stocks and forex on the weekend and review long term stock strategies&fundamentals, they like the graphs and pictures and cool sounding words- some say you can never start too young. We also talk about properties/tenants and good looking assets while on road trips, and i play tax minimisation pod-casts theyre not old enough to complain yet, obviously