Best way to invest kids savings in shares?

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Forums › Finance and wealth management › Best way to invest kids savings in shares?

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Mad Scientist
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#3309402 15-Nov-2024 15:46

tweake:

i would do kiwi saver to start with.

the reason being is KS is hard to access, more importantly hard for other people to access. so many times that people setup accounts/investment for kids, and it gets cleaned out in the divorce, scammers, hacks, family members drug problem etc. or it gets cleaned out as soon as kids get access to it. this is why govt proposed opening up KS for other things so certain industries (like housing) could profit by cleaning out peoples KS accounts.

thanks, i'm not worried about it getting used, just wanting the best returns.

jonathan18

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#3309405 15-Nov-2024 16:02

Batman:

thanks, i'm not worried about it getting used, just wanting the best returns.

Though how and when it's used will influence what options are suitable. For example, if the intent is for this to be savings that your children can't access until buying their first house then, yep, KS may be a good option. But if you want them to be able to access it earlier and for other reasons (eg university) then it's clearly not...

We deliberately don't put these savings into the kids' KS accounts as we expect them to be able to need it when at uni (or equivalent). They're in the kids' names so they'll have full control from 18. Yep, that could go completely wrong, but that's a risk I believe we needed to take - I've done my best to ensure they have an adequate level of financial literacy, and so have done what I can to set them up for making sensible decisions.

tweake

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#3309406 15-Nov-2024 16:06

Batman:

thanks, i'm not worried about it getting used, just wanting the best returns.

i don't share your confidence. life happens and good intentions turn bad real fast.

just remember that if it gets used, then the return is zero and that's certainly not what your after.

rabba

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#3309409 15-Nov-2024 16:09

jonathan18:

While I'm sure others will encourage investing in shares, including on platforms like Sharesies etc, we chose to go down the route of managed funds, as we have for our own savings (tried a couple of times with Sharesies but simply don't have the interest or knowledge in it to make it worthwhile). I had a direct conversation with the kids about it (as it's their money), so they decided how much to put into what fund etc, and I let them know monthly how they're doing, so a good opportunity to grow knowledge without having to be too hands-on. They're with Fisher Funds, as it bought up KiwiWealth, but these days I'd have suggested Milford, which I've found good for both KiwiSaver and managed funds.

Obviously so many options out there and as many opinions! Money Hub can be a good source of info, though: https://www.moneyhub.co.nz/investing-for-kids.html

You can now invest in Milford Managed Funds via Sharesies

Batman

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#3309411 15-Nov-2024 16:18

tweake:

Batman:

thanks, i'm not worried about it getting used, just wanting the best returns.

i don't share your confidence. life happens and good intentions turn bad real fast.

just remember that if it gets used, then the return is zero and that's certainly not what your after.

ok let me think about this a bit. thanks

Handle9

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#3309422 15-Nov-2024 17:47

Batman:

cddt:

Uff CMC Markets is not an investment platform, it's a trading platform. Not ideal for long term investment. Basically gambling if you don't know what you're doing. And even if you do know what you're doing, there's a good chance you'll be losing money too.

Something like Simplicity, InvestNow, Kernel, etc. is what you are looking for. I believe some are offering reduced account fees for <18.

how do these perform compared to Milford?

There's nothing inherently wrong with trading platforms, it depends on their fees and how you use them. I use Interactive brokers as they are low fee and in the markets I care about but there are plenty of others. I buy and hold, I don't actively trade.

There's a number of basic questions you need to answer before anyone can really give you meaningful advice. What is the money to be used for and when? That's the most important question really. Is it an emergency fund, education fund or first house fund?

What is you financial discipline and interest in actively managing the investment? Are you looking for set and forget or are you willing to take an active part? Do you have the discipline to not panic when the market drops 30% and keep investing in the faith that markets always rebound and you'll be better off in the long run?

There's lots of options and getting advice from a paid (not free/commission sales) financial adviser may be your best bet if you aren't willing to do invest a fair bit of time reading and investigating.

cddt

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#3309443 15-Nov-2024 18:58

Handle9:

There's nothing inherently wrong with trading platforms, it depends on their fees and how you use them.

CMC Markets is a CFD (contract for difference) trading platform - you don't own any shares. Very different.

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#3309445 15-Nov-2024 19:05

Handle9:There's a number of basic questions you need to answer before anyone can really give you meaningful advice. What is the money to be used for and when? That's the most important question really. Is it an emergency fund, education fund or first house fund?

What is you financial discipline and interest in actively managing the investment? Are you looking for set and forget or are you willing to take an active part? Do you have the discipline to not panic when the market drops 30% and keep investing in the faith that markets always rebound and you'll be better off in the long run?

There's lots of options and getting advice from a paid (not free/commission sales) financial adviser may be your best bet if you aren't willing to do invest a fair bit of time reading and investigating.

Money is for the kids' house deposit, in 3-5 years.

Set and forget.

Won't panic, know there is always risk.

Handle9

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#3309446 15-Nov-2024 19:12

Batman:

Handle9:There's a number of basic questions you need to answer before anyone can really give you meaningful advice. What is the money to be used for and when? That's the most important question really. Is it an emergency fund, education fund or first house fund?

What is you financial discipline and interest in actively managing the investment? Are you looking for set and forget or are you willing to take an active part? Do you have the discipline to not panic when the market drops 30% and keep investing in the faith that markets always rebound and you'll be better off in the long run?

There's lots of options and getting advice from a paid (not free/commission sales) financial adviser may be your best bet if you aren't willing to do invest a fair bit of time reading and investigating.

Money is for the kids' house deposit, in 3-5 years.

Set and forget.

Won't panic, know there is always risk.

3-5 years put it in high interest term deposits. When we hit a bear market it could last 3-5 years before it recovers.

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#3310747 19-Nov-2024 19:17

I like Simplicity and Milford. I have reduced Kiwi saver contributions and run parallel investment account(s) so that there is flexibility. Low fees and good returns.

jonathan18

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#3310780 19-Nov-2024 20:59

Handle9: 3-5 years put it in high interest term deposits. When we hit a bear market it could last 3-5 years before it recovers.

So this, I reckon… 3-5 years is a pretty short period as far as investments go, so I wouldn’t have thought it was appropriate to take on any/much risk (especially where things are at in a geopolitical sense).

Here’s what Sorted says on this:

How long do I want to invest for?
How long you invest your money for is called ‘duration’. For example, you may have goals for the short (1–3 years), medium (4–9 years) or long term (10 years plus). Each of those timeframes would require a different sort of investing, since you’ll need your money back at a certain time.

For the short term, you might invest in a term deposit or a fund that is ‘defensive’. For the medium term, perhaps mostly bonds (which are loans to governments or companies), or a ‘conservative’ or even ‘balanced’ fund. For the long term – when you can ride out the ups and downs of more turbulent markets for a while – a basket of shares in a ‘growth’ or ‘aggressive’ fund would typically bring you higher returns in time.

Handle9

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#3310781 19-Nov-2024 21:06

jonathan18:

Handle9: 3-5 years put it in high interest term deposits. When we hit a bear market it could last 3-5 years before it recovers.

So this, I reckon… 3-5 years is a pretty short period as far as investments go, so I wouldn’t have thought it was appropriate to take on any/much risk (especially where things are at in a geopolitical sense).

Here’s what Sorted says on this:

How long do I want to invest for?
How long you invest your money for is called ‘duration’. For example, you may have goals for the short (1–3 years), medium (4–9 years) or long term (10 years plus). Each of those timeframes would require a different sort of investing, since you’ll need your money back at a certain time.

For the short term, you might invest in a term deposit or a fund that is ‘defensive’. For the medium term, perhaps mostly bonds (which are loans to governments or companies), or a ‘conservative’ or even ‘balanced’ fund. For the long term – when you can ride out the ups and downs of more turbulent markets for a while – a basket of shares in a ‘growth’ or ‘aggressive’ fund would typically bring you higher returns in time.

It's one of those upside/downside things. You don't get a huge benefit from compounding but have the potential to get a big haircut in the short term.

Over time that risk largely goes away due to time in the market and the big benefits from compounding are there.

xlinknz

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#3325359 28-Dec-2024 16:19

freitasm:

You can open a Sharesies account for kids (affiliate link), and indicate at which age the account "ownership" is transferred to them.

Or you can open a KiwiSaver account and benefit from the money the government puts in there every year, providing you also put some in. The downside is that the Kiwisaver is tied up until retirement or early withdrawal for a first-home buy.

Note with Sharesies and Hatch Invest kids accounts I was disappointed to find the kids accounts do not get their own login, so yes money can be invested for them as a sub account of the adult/parent account. What would be better is if the kids accouts were read only accounts or better still any trade sends a request for approval to the adult account.

That said Sharesies minimum age for a full account is 16, Hatch Invest and Tiger Brokers are 18

Tinkerisk

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#3325376 28-Dec-2024 17:08

These are nothing more than bets on the future. You should always spread your capital across several forms of investment (especially old-fashioned ones). I have seen many people in my life who have put all their eggs in one basket. That's all I'm saying. 😊

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blackjack17

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#3325477 28-Dec-2024 18:19

mkissin:

When I did this for my kids, I just opened High Growth accounts with Simplicity (1 each in my name and my wife's, due to the way Simplicity works).

This had two benefits for me...

I have control over the money, so if one of my kids isn't making great life choices at 18, they won't just automatically get the money.

They'll be able to access it early if they're wanting to use it for any of a myriad of good uses before they hit 65...by which time it'll be closing in on the year 2100 and the earth may just be a smoking crater.

Your milage may vary on one or other of these points.

Won't this mean it will be taxed at your tax rate rather than theirs?

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