Help super-size your little one's future

Investing for your kids is a great way to set them up for success. And it’s easier than you might think. Here’s how.

Between increasing house prices and the soaring cost of living, many young Australians are having to rely on a cash injection from the Bank of ‘Mum and Dad’ to buy their own homes. According to research*, a sum of $10,000 can make a huge difference. But if the thought of ponying up that much cash in one hit makes your stomach churn, start building that nest egg now. Pint-sized amounts of cash now can turn into a game-changing amount by the time they’re old enough to drive you to the open home.

 

Baby steps

Kids want to do everything themselves - and for the most part, you should let them. But one thing you can do for them today (that they may even thank you for in a few tomorrows) is invest. If you start with a small, regular amount and let the gains build up over time, the returns can actually be greater than what a bank account gives. Even better, if you involve your kids in the process, it can be a great way to build their financial literacy too.

 

Look who’s talking

When your kids are young, try talking to them about the importance of saving so they begin to understand concepts like goal setting, delayed gratification and even the notion of setting cash aside for a rainy day. Then as they get older, you can discuss the buying and selling of shares, how these can go up and down in value, and the benefits of variety (aka diversification). Keep money conversations fun and relatable so their interest grows alongside their portfolio.

 

Trading places

With a Commsec Minor Trust Account, investing for your kids is easy. It creates an informal trust, with a trustee (you) and a beneficiary (your child). You then buy and hold shares for your child, which can be transferred to an account in their own name when they turn 18.

And you don’t have to be the child’s parent. A CommSec Minor Trust Account can be opened and topped up by any adult related to the child – think grandparents, guardians, aunts and uncles. So there’s Christmas sorted for the next 18 years. A slightly “out of the box” gift idea that will help bring a loved one closer to owning their own property one day... beats putting another pair of socks under the tree.

 

^{*Whelan, S., Atalay, K. , Barrett, G. , Cigdem-Bayram, M. and Edwards, R. (2023) Transitions into home ownership: a quantitative assessment, AHURI Final Report No. 404, Australian Housing and Urban Research Institute Limited, Melbourne. Please note that all investing comes with risk.}