# Saving for my kids...



## Ben Gordon (15 April 2021)

Howdy!

I have a two year old and four year old. They both have a combined savings of $1300. I have been putting away approx. 2-10 bucks a week away for them since they were born.

I have recently invested some of my personal money into a micro-investing SV

The bank account that my kids money is in earns little to no interest and i wonder if these is a better strategy to get them more money in the long run. Should i add it into my spaceship voyager account or put it somewhere else? I am currently to date putting $10 a week for each child, so $20 a week and plan to keep doing so.

My plan for their savings is to give it to them when they are 16-18 or so and contribute to buying a car, uni education bills or something.

Cheers


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## tech/a (15 April 2021)

There are no real ways of growing a small account without taking some risk.
But your risk should be quantified. ( Learn how to quantify risk )
If it was me I’d be looking for an opportunity in a small cap with growth potential

i was noticing Coal in Iron ore stock were on the move.
Im. Builder so a far cry from a financial planner.

Just one observation
You’ve  got a lot of years to achieve what you want 
if you get really good at this the cash will be hard to resist 
speaking from experience!


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## Dona Ferentes (15 April 2021)

compounding ... 8th wonder of the world.


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## Ben Gordon (15 April 2021)

tech/a said:


> There are no real ways of growing a small account without taking some risk.
> But your risk should be quantified. ( Learn how to quantify risk )
> If it was me I’d be looking for an opportunity in a small cap with growth potential
> 
> ...



Thanks. Well I have some money in spaceship app and thinking of adding the kids money to this


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## Ben Gordon (15 April 2021)

Dona Ferentes said:


> compounding ... 8th wonder of the world.



You mean compounding as in I should put it in investments. I feel spaceship is safe and cheap!


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## tech/a (15 April 2021)

Just another managed fund with corresponding fees.
your delegating responsibility,time .

If you want exceptional return you’ll have to do something exceptional.
Same,Same returns ——same same.


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## Ben Gordon (15 April 2021)

tech/a said:


> Just another managed fund with corresponding fees.
> your delegating responsibility,time .
> 
> If you want exceptional return you’ll have to do something exceptional.
> Same,Same returns ——same same.



Sure but I am time poor. Two young kids, I work full time, at uni full time (doing a master's in my professional profession) a wife and a house to maintain. I see a managed fund at perfect option for people like me.. no?


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## tech/a (15 April 2021)

Yes.
But don’t expect anything out of the ordinary.

Have you considered crypto currency’s 
Highly likely that when your kids are 18 
they will be very common place.

And lots of past to look back on!


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## Value Collector (15 April 2021)

Ben Gordon said:


> Howdy!
> 
> I have a two year old and four year old. They both have a combined savings of $1300. I have been putting away approx. 2-10 bucks a week away for them since they were born.
> 
> ...



Hi Ben,
Congrats on starting a savings plan for your kid’s.

I think these funds should definitely be invested in a way that they will grow over and be protected from inflation.

If it were my kids I would probably just dollar cost average into an whole of market global and Australian index fund and not sell (to avoid capital gains tax).

or as I have recommended to my family who are also saving for kids simply but the kids some Berkshire Hathaway shares each time their account gets up to $1000 or so.

the reason I say Berkshire Hathaway is that it is a diversified company so you have lower risk and they don’t pay dividends so you don’t have to worry about income tax.


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## Value Collector (15 April 2021)

Ben Gordon said:


> Sure but I am time poor. Two young kids, I work full time, at uni full time (doing a master's in my professional profession) a wife and a house to maintain. I see a managed fund at perfect option for people like me.. no?



This also leads me to believe a completely hands off dollar cost averaging into an index fund or Berkshire Hathaway is your best approach.


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## againsthegrain (15 April 2021)

Nobody mention gold?  looking back at last 10-20 years gold has some good returns, if not just a hedge against inflation


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## Value Collector (15 April 2021)

againsthegrain said:


> Nobody mention gold?  looking back at last 10-20 years gold has some good returns, if not just a hedge against inflation



It’s better to buy assets that will have similar inflation hedge to gold, but that also throw off cashflow that can be used to build up more assets.

for example, if you buy an ounce of gold today  in 20 years its value in dollars might have increased with inflation, but it will still just be an ounce of gold.

however, if bought for example an acre of farm land, it’s value will mostly likely increase with inflation just like gold, however it throws off income which can be used to buy more farm land, so after 2 years you might own 3 Acres instead of just the 1 you start with.

moral of the story is 1 ounce of gold will always be 1 ounce of gold, where as income producing assets will compound, and as another poster above said, compounding is the 8th wonder of the world.

even if you invest in Berkshire as I suggested above and receive no dividends, the income produce by the underlying assets gets reinvested within the company, so Berkshire will almost definitely outperform gold, because they will have the benefits of inflation hedging built in, while also the compounding effect of reinvested earnings


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## againsthegrain (16 April 2021)

It seems like in the last 20 years Berkshire increased around 5x in price Gold has increased around 4x in price.  1 share of Berkshire will always be 1 share since you receive no dividends just like 1oz of gold will always be 1oz of gold seems like a fair comparison


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## systematic (16 April 2021)

I’m with @Value Collector 
For what you want to do, set and forget investing, I’m a fan of indexing. 

Unless you have convictions (eg a value fund that you like) I suggest going broad global. I’m practically a shill these days on this forum, for Vanguard high growth fund (life strategy it used to be called, and may still be). For specific reasons of not requiring you to do anything about rebalancing etc.

If you prefer more asset classes or more Aussie heavy, for example, you’d have to start taking responsibility for the balancing of your investments. That would be next level active, from pure passive. Anything else logically requires you to have a reason to do it. But you’ll always get bizarre suggestions, including on this forum, from those who don’t really have the ability to see outside their own circumstances or convictions.


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## Value Collector (16 April 2021)

againsthegrain said:


> It seems like in the last 20 years Berkshire increased around 5x in price Gold has increased around 4x in price.  1 share of Berkshire will always be 1 share since you receive no dividends just like 1oz of gold will always be 1oz of gold seems like a fair comparison



Yes one share in Berkshire will still be one share, how ever that 1 share will represent a claim on a much larger pile of underlying assets as Berkshire continue to buy more investments while also buying back shares.

where as that ounce of gold will still only represent they same underlying number of atoms of metal.

55 years ago you could have chosen either 1 ounce of gold or 5 Berkshire shares for the same price.

Today that ounce of gold is worth about $1,750 US dollars which is a good inflation hedge, however the Berkshire shares are now worth $400,000 each and you would have got 5 of them =  $2,400,000

Compounding is a really good thing long term, unfortunately gold doesn’t grow, it just sits there.

as I said if you want a strictly low risk inflation hedge, buy gold but if you also want an investment return, by a real investment.


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## Belli (16 April 2021)

No suggestions for you on where to invest the funds you have for your children but be aware of this









						Children's share investments
					

Information about who is responsible for paying tax on dividends received from share investments made by or on behalf of children.




					www.ato.gov.au
				




The other matter, which is morbid I'm afraid, is if it hasn't already been done, see if the grandparents have established a Testamentary Trust via their Wills.  Minors are taxed at adult rates and that can overcome the issue above.  Can be a very powerful vehicle.  Have known of cases where childrens uni accommodation and other matters have been funded in that manner.

Maybe good to consider to incorporate a TT in the Wills of both yourself and your wife.

On the flip side, have also known of situations where a Trustee (a relative of the primary beneficiaries) has ripped off the benficiaries, so if you go down that path chose the Trustee very carefully.


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## tech/a (16 April 2021)

We are talking about $1300
not $130,000.or $1.300,000.

also around 10-15 years not a lifetime.
How much same old same old snail investment
return do you realistically expect.

Seems like a thread of Volvo Drivers dressed in 
brown corduroy.


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## Ben Gordon (16 April 2021)

systematic said:


> I’m with @Value Collector
> For what you want to do, set and forget investing, I’m a fan of indexing.
> 
> Unless you have convictions (eg a value fund that you like) I suggest going broad global. I’m practically a shill these days on this forum, for Vanguard high growth fund (life strategy it used to be called, and may still be). For specific reasons of not requiring you to do anything about rebalancing etc.
> ...



Do you have a suggestion on what company to use for an index fund? Is vanguard one?


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## Value Collector (16 April 2021)

Value Collector said:


> Yes one share in Berkshire will still be one share, how ever that 1 share will represent a claim on a much larger pile of underlying assets as Berkshire continue to buy more investments while also buying back shares.
> 
> where as that ounce of gold will still only represent they same underlying number of atoms of metal.
> 
> ...



Sorry, 5 x $400,000 is $2,000,000 not $2,400,000... maybe I shouldn’t do math after midnight hahaha


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## systematic (16 April 2021)

Ben Gordon said:


> Do you have a suggestion on what company to use for an index fund? Is vanguard one?



Any decent one that you like or that your advisor recommends. But what my post refers to is vanguard life strategy. Just take a look at it, it may or may not suit. All it does is give global equity cheaply and conveniently, that’s my point.


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## Value Collector (16 April 2021)

Ben Gordon said:


> Do you have a suggestion on what company to use for an index fund? Is vanguard one?



Vanguard is good, you can buy shares in the index on the share market, the share code is VGS for the global index and VAS for the Australian Index.


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## Value Collector (16 April 2021)

systematic said:


> Any decent one that you like or that your advisor recommends. But what my post refers to is vanguard life strategy. Just take a look at it, it may or may not suit. All it does is give global equity cheaply and conveniently, that’s my point.



If there an ETF for the Life Strategy?


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## Ben Gordon (16 April 2021)

systematic said:


> Any decent one that you like or that your advisor recommends. But what my post refers to is vanguard life strategy. Just take a look at it, it may or may not suit. All it does is give global equity cheaply and conveniently, that’s my point.



Thanks


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## Ben Gordon (16 April 2021)

Value Collector said:


> Vanguard is good, you can buy shares in the index on the share market, the share code is VGS for the global index and VAS for the Australian Index.



Thank you


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## systematic (16 April 2021)

tech/a said:


> We are talking about $1300
> not $130,000.or $1.300,000.
> 
> also around 10-15 years not a lifetime.
> ...




You’re right.  

Forget everything I said and just buy crypto, coal and iron ore as per your posts above.  You noticing something, ‘on the move’ is good enough for me. Empirical evidence can go jump.


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## Ben Gordon (16 April 2021)

Value Collector said:


> Vanguard is good, you can buy shares in the index on the share market, the share code is VGS for the global index and VAS for the Australian Index.



One day when I decide to take the money out for my kids I assume I will need to pay tax on earnings?

Is vanguard more preferred over say space ship voyager?


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## Value Collector (16 April 2021)

tech/a said:


> We are talking about $1300
> not $130,000.or $1.300,000.
> 
> also around 10-15 years not a lifetime.
> ...



The OP wants to put some savings aside for his kids to get a car or some Uni education, I don’t think he is trying to shoot the lights out with massive invest returns.

From what he has said I think his priority is low risk investment, protecting the savings from inflation and receiving a decent return and not having to dedicate a lot of time to it, I think this does lead him more to the index style investment rather than the active route.


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## Value Collector (16 April 2021)

Ben Gordon said:


> One day when I decide to take the money out for my kids I assume I will need to pay tax on earnings?
> 
> Is vanguard more preferred over say space ship voyager?



Yes you will be charged capital gains tax if the shares have gone up, but you will get a 50% discount if you have held for more than 12 months, you can deduct that from the amount you give your kids, or you can just pay that tax as an additional gift to your kids and let them keep the whole amount.

I don’t know anything about space ship unfortunately.


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## Value Collector (16 April 2021)

You will also have to pay tax each year on the dividends, but this may be offset but franking credits, that is the reason I suggested Berkshire to my family, because they don’t pay dividends.


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## systematic (16 April 2021)

Value Collector said:


> If there an ETF for the Life Strategy?



Yes, both fund and ETF
VDHG for the high growth (and there are 3 others that basically differ in their percentage allocation between equities and debt)


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## Ben Gordon (16 April 2021)

Value Collector said:


> Yes you will be charged capital gains tax if the shares have gone up, but you will get a 50% discount if you have held for more than 12 months, you can deduct that from the amount you give your kids, or you can just pay that tax as an additional gift to your kids and let them keep the whole amount.
> 
> I don’t know anything about space ship unfortunately.



Thank you.

Spaceship voyager is a managed fund.

Sorry for all of the basic questions, i'm very new to this scene.


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## Ben Gordon (16 April 2021)

systematic said:


> Any decent one that you like or that your advisor recommends. But what my post refers to is vanguard life strategy. Just take a look at it, it may or may not suit. All it does is give global equity cheaply and conveniently, that’s my point.



thank you! i might move from spaceship voyager to there. Do they also have an app to use?


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## Dark1975 (16 April 2021)

Ben Gordon said:


> Howdy!
> 
> I have a two year old and four year old. They both have a combined savings of $1300. I have been putting away approx. 2-10 bucks a week away for them since they were born.
> 
> ...



G'Day Mate

Depending on your risk appetite?

What they teach in Mit / Uts / yale etc in the course of getting your masters in appplied finance is risk aversion ( risk to reward )

Pending on your risk appetite , in lays terms the greater the risk the greater the reward.
Either you pay  some finacial advisor 
Or put money spread in the asx 50 compound interest will achieve this ,
My opinion would be researching rare earth small caps in the asx like Lyc / Gxy / ggg 
Or for greater risk look in to spreading some pennies in the Crypto market .
Investing in to block chain or digital platforms is like investing in amazon 1999 , 

Quite simply put : " If your are investing like the other 95% of people you will be like the other 95% ( Working in the matrix till 60)

This is not finacial advice, Pls DYOR 
GL Sir


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## Ben Gordon (16 April 2021)

Dark1975 said:


> G'Day Mate
> 
> Depending on your risk appetite?
> 
> ...



Thank you dark!

I am so so so new to this all. I'm more thinking instead of putting my kids money each week into the Commonwealth bank should I invest it somewhere else and they could potentially have even more money when I give it to them. But also I don't want to risk the money causing me to in the end loose money as that would be silly I guess.

I just started using micro investing apps and thought wait a min could I do better for my kids with their money.


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## bsnews (16 April 2021)

Dark1975 said:


> G'Day Mate
> 
> Depending on your risk appetite?
> 
> ...



All to much work.
Invest it in one of the older LIC's, tick reinvestment share offer buy the bonus share offer every time you can afford to no matter the asking price. Set and forget until you need it. Will not break any records but will keep on keeping on.


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## Ben Gordon (16 April 2021)

bsnews said:


> All to much work.
> Invest it in one of the older LIC's, tick reinvestment share offer buy the bonus share offer every time you can afford to no matter the asking price. Set and forget until you need it. Will not break any records but will keep on keeping on.



Yeh I need a simple solution. I don't want massive reward but better then what I will get with a bank account.


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## tech/a (16 April 2021)

systematic said:


> You’re right.
> 
> Forget everything I said and just buy crypto, coal and iron ore as per your posts above.  You noticing something, ‘on the move’ is good enough for me. Empirical evidence can go jump.



You've presented an option as I have. Empirical Evidence Has served the world very well.


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## againsthegrain (16 April 2021)

Value Collector said:


> where as that ounce of gold will still only represent they same underlying number of atoms of metal.




Come on you can do better then that,  just suits your argument.  You can say that about crypto or even your shares they are 1s and 0s on a electronic system.  Yes on a 40 or 50 year scale Berkeley outperformed gold,  I am not arguing gold is better or will outperform Berkeley. However its not entirely true,  you hold a piece of gold much like you hold a bitcoin. Gold even has real world applications like electronics and jewellery etc.  You could say it is also a producing asset because the demand behind it and real world applications. Also you still need to mine and refine gold,  the cost of producing gold is also factored into the price and all the asset producing gold miners.

Seems like a bigger return then just inflation


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## Value Collector (16 April 2021)

againsthegrain said:


> Come on you can do better then that,  just suits your argument.  You can say that about crypto or even your shares they are 1s and 0s on a electronic system.  Yes on a 40 or 50 year scale Berkeley outperformed gold,  I am not arguing gold is better or will outperform Berkeley. However its not entirely true,  you hold a piece of gold much like you hold a bitcoin. Gold even has real world applications like electronics and jewellery etc.  You could say it is also a producing asset because the demand behind it and real world applications. Also you still need to mine and refine gold,  the cost of producing gold is also factored into the price and all the asset producing gold miners.
> 
> Seems like a bigger return then just inflation



It wasn’t just Berkshire that outperformed gold, you would have outperformed gold just with an index and reinvested dividends, or real estate where you reinvested the earnings into busying more real estate.

its the compounding effect that is my point here, gold just doesn’t compound,... unless you know of some way to generate rent by leasing your gold?

rather than dig your heels in, try to understand my point at a fundamental level.

my point is simply, gold is a good hedge against inflation, however so are many other asset classes that also throw of earnings that can be reinvested to continue buying more of the asset.

Hell, if if you bought $1 million of gold, and I bought $1 million of real estate, each year I could use my Net rental profits to buy gold and I would end up with my original realestate  plus a pile of gold that is bigger than yours.

if you can understand that point, I think you are failing to understand a basic investment principle.

——————
or you can think of it this way.

We give your family $1 Billion of gold and that’s all they can ever own for the next 10 generations, and my family gets $1 Billion worth of diversified real estate that they can lease and that’s all they can ever own.

The first few generations of your family could live super rich, but their gold stash never earns anything so it shrinks in weight every time they spend/consume because they have no choice but to sell a few kilograms each year.

however my family could live in perpetual riches from the annual leasing income from their real estate, much like the royal family live off the crown estate, and never have to eat into their capital base


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## Value Collector (16 April 2021)

Ben Gordon said:


> Yeh I need a simple solution. I don't want massive reward but better then what I will get with a bank account.



Aussie and global index is going to be best in my opinion.

look into VAS and VGS and see what you think.


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## tech/a (16 April 2021)

Value Collector said:


> The OP wants to put some savings aside for his kids to get a car or some Uni education, I don’t think he is trying to shoot the lights out with massive invest returns.
> 
> From what he has said I think his priority is low risk investment, protecting the savings from inflation and receiving a decent return and not having to dedicate a lot of time to it, I think this does lead him more to the index style investment rather than the active route.




And yes i get that too.



Dark1975 said:


> G'Day Mate
> 
> Depending on your risk appetite?
> 
> ...




And I think Dark gets what Im getting at.

The OP asked for opinions and he has Opinions.

Good luck.
Let us know in 15 years how it panned out.


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## againsthegrain (16 April 2021)

I never mentioned property,  your not comparing apples to apples started off with non dividend shares,  property is a totally diff topic


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## frugal.rock (16 April 2021)

G'day Ben, 

Remember, anything suggested here are just ideas not advice.

If you think about the world your kids are going to grow up into, that may give you a few ideas where to put some money.

Eg: coal and oil on the out.
Anything electric vehicles on the up. Environmental concerns on the up.
When your kids are 18, there's going to be very few internal combustion engines, etc.

ETF's (exchange traded funds) invest in many companies in a particular industry or market segment and there is plenty to choose from.

ETF shares are bought/ sold like normal stock market stocks and are "generally" considered lower risk than individual stocks.

Using this forward thinking methodology and as an example only, an ASX listed ETF that may be of interest is ACDC as it's invested in lithium and battery technologies.

These may be available through micro investment methods like Comsecc Pocket? (which I believe only offers ETF's) or others.

I would like to be doing the same as you (kids savings), but got a late start myself so am aiming to build the family situation and teach the kids about risk and money management. 

My eldest child has recently started working on a casual basis and has earned around $1000 thus far, so am encouraging her to consider investing it using something like the "pocket" app mentioned.

After all said and done, a diversified spread of investment will minimise risk of any one under performing area. 
This will become more important and open up more options as the capital base grows.

All the best.


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## Value Collector (16 April 2021)

I am comparing it to any income producing asset that has inflation protection and the ability to compound, and you can by shares in property trusts by the way anyway.

You can compare it to the index if you want, if you owned $1 million of gold and I owned $1 million of the index after about 20 years I would own more gold than you plus still have the index holding.

That is why Berkshire has out performed gold, not because Berkshire is magic, but because the assets they buy throw off income that can be used to buy more assets.

As I said it’s a simple investing concept, you should really understand it, it doesn’t matter whether we are talking about property or industrial shares, in general productive assets that throw off income streams will outperform non productive commodity holdings.

that’s just the way it is, think about it, if Berkshire had bought gold and just sat on it instead of buying assets that produce income, Buffett would not be a billionaire today.


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## againsthegrain (16 April 2021)

Value Collector said:


> I am comparing it to any income producing asset that has inflation protection and the ability to compound, and you can by shares in property trusts by the way anyway.
> 
> You can compare it to the index if you want, if you owned $1 million of gold and I owned $1 million of the index after about 20 years I would own more gold than you plus still have the index holding.
> 
> ...




Yet buying 1 share in Berkshire 20 years ago you would still have 1 share of Berkshire today and the 1s and 0s that make up that share would still be the same 1s and 0s and not increase


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## Ben Gordon (16 April 2021)

Thanks all for your advice and time


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## Craton (16 April 2021)

G'day Ben and welcome.
Juz my  worth.

Have you consulted a Financial Adviser?

Saving for your kids is a great idea, did that for both of mine, money matured when they turned 21. Both were life policies, can't remember the actual term but basically, invested monthly and covered them both if they should die.
From memory, payout was about 50% more than invested over the life of those plans.

Now, have you considered yourself in the picture?
What happens if you should pass from your mortal coil and can no longer contribute to your kids savings?

You say you're all new to this, hence my opening question about consulting a Financial Adviser, take up the offer of free first appointment. If nothing else, that consult will help crystallize your financial (any other) goals and objectives.

GL with it and long may you prosper.


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## Value Collector (16 April 2021)

againsthegrain said:


> Yet buying 1 share in Berkshire 20 years ago you would still have 1 share of Berkshire today and the 1s and 0s that make up that share would still be the same 1s and 0s and not increase



I am worried that you don’t understand what a share is, yes You still have just one share, but that share represents a claim on an underlying group of assets which had more than tripled in size in the last twenty years, its. It just 1’s and 0’s.

I am not sure why you are struggling to understand this concept.

try hard to understand what I am about to say, with out trying to just think of a response until after you understand my point.

when you buy an ounce of gold, you own a fixed number of gold atoms that will never grow.

When you buy a Berkshire share you own a group of underlying businesses and investments that can grow.

for example Berkshire now owns 5% of Apple, which it did not own 20 years ago, it owns a larger slice of the Coca-Cola company, many of its businesses have also grown in size etc.

so yes you own 1 share of Berkshire, but what is relevant is that the share represents a growing pile of assets, where as you gold won’t grow.


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## Warr87 (16 April 2021)

Ben Gordon said:


> You mean compounding as in I should put it in investments. I feel spaceship is safe and cheap!




I signed up to spaceship a while ago. it's not bad. but if you look at the fees for a small size investment, it is a bit high (from what I remember).



Ben Gordon said:


> Sure but I am time poor. Two young kids, I work full time, at uni full time (doing a master's in my professional profession) a wife and a house to maintain. I see a managed fund at perfect option for people like me.. no?




I feel you there. I work fulltime and uni fulltme. Though no kids or house. The last few months I've felt particularly time poor. I tried to learn as much as I could before I knew my time would shrink. Learning how to trade like most of us on this forum can be addictive. 

Unfortunately for whatever option you chose, you will likely have a high cost compared to your investment. This includes a managed fund or buying into an ETF. this is because there is usually a cost involved in the buying (or selling). One option could be wait until you have a few hundred. With shares at the very least, you need at least $500. 

I like the idea of an index fund. simply getting the return of the index without worrying about what to buy/sell isn't a bad option. a lot of managed funds don't even beat there benchmark (the index).

the final thing for you to consider is Australian Ethical. I invested money with them a while ago (before I learned to trade). You can start with a small amount, and the returns weren't too bad. I think they have an automatic investment option too for small accounts giving you a smaller entry. Something to consider. I don't hold them now, but that being said I still recommend them.


Good luck.


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## againsthegrain (16 April 2021)

Value Collector said:


> when you buy an ounce of gold, you own a fixed number of gold atoms that will never grow.




Yet the price of gold has increased 500% in the last 10-20 years,  it is really irrelevant what is happening behind the scenes while the value of the share/gold grows

Now you are arguing for the sake of arguing,  im just going to leave this here for you. 
Past Performance Is No Indicator of Future Performance

It seems you do not understand comparing 1:1

over and out


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## tech/a (16 April 2021)

againsthegrain said:


> Yet the price of gold has increased 500% in the last 10-20 years,  it is really irrelevant what is happening behind the scenes while the value of the share/gold grows
> 
> Now you are arguing for the sake of arguing,  im just going to leave this here for you.
> Past Performance Is No Indicator of Future Performance
> ...




10 years ago 1 Berkshire Share was worth about 80,000USD 
today it’s 404000 USD 
long term that’s a pretty good investment 

In Berkshires case and it’s pretty rare Past performance may not 
indicate future performance 
it’s likely to be under rated.


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## Value Collector (16 April 2021)

againsthegrain said:


> Yet the price of gold has increased 500% in the last 10-20 years,  it is really irrelevant what is happening behind the scenes while the value of the share/gold grows
> 
> Now you are arguing for the sake of arguing,  im just going to leave this here for you.
> Past Performance Is No Indicator of Future Performance
> ...



Gold is worth about the same Today as what it traded for in US dollar terms 10 years ago, not so good for an asset that also hasn’t produced an “ounce” of income (pardon the pun).

Yeah gold has gone up a lot if you want to cherry pick your dates and use the 20 year chart, but it went sideways for 20 years before that, so it has performed well 25% of the time in the last 40 years, while producing no income, not so flash.

As I have tried to explain, you are missing the basic point that inflation hedged income generating assets will always have huge edge over assets that are solely inflation hedges.


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## Value Collector (16 April 2021)

tech/a said:


> 10 years ago 1 Berkshire Share was worth about 80,000USD
> today it’s 404000 USD
> long term that’s a pretty good investment
> 
> ...



Berkshire is an extreme example, but the point I am trying to explain to against the grain doesn’t rely on Berkshire’s extreme performance, even something as the index or simple as a residential real estate beats gold over time, not because of a price boom, but just the income generation alone.

If he could understand the simple point that you could buy a house (or shares, farmland anything), and then use the income each your to purchase gold and end up with more gold than you would have if you just bought gold at the start and you would still own the income asset too, he would understand the strength of income assets vs commodities.

however I think he is purposely trying to confuse the issue.


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## jbocker (17 April 2021)

Value Collector said:


> Sorry, 5 x $400,000 is $2,000,000 not $2,400,000... maybe I shouldn’t do math after midnight hahaha



I know what you mean even tho Maffermaticks and inglish were my best 3 subjects at scool after midnite I always lose count of the beers i drunk.
Back to subject
In saving for your kids (in good time) I would teach the power of compounding and consistency of saving and quantity. And Pay yourself first.


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## over9k (17 April 2021)

Kind of concerning just how much bad advice is being doled out in this thread tbh. Especially from a lot of members that I would have thought would know better.


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## Ben Gordon (17 April 2021)

over9k said:


> View attachment 122897
> View attachment 122895
> View attachment 122896
> 
> ...





Index fund is your recommendation?


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## over9k (17 April 2021)

Yes, and without making a huge 5,000 word post on why, an american one.

There's also things called "leveraged" index funds that get 2x or even 3x the normal return. SPXL is the ticker code for the 3x leveraged S&P 500 fund. 


But it's not actually me saying this - it's the most successful investors of all time saying it


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## Cam019 (17 April 2021)

over9k said:


> Kind of concerning just how much bad advice is being doled out in this thread tbh. Especially from a lot of members that I would have thought would know better.



I could not agree more. Also agree with everything @Value Collector & @systematic have said.



Ben Gordon said:


> Sure but I am time poor. Two young kids, I work full time, at uni full time (doing a master's in my professional profession) a wife and a house to maintain. I see a managed fund at perfect option for people like me.. no?



I have tried so many different things over the years, and the one thing that always stops them dead in their tracks is that like you, I am time poor. I have come to the realisation that index investing is the best path for me. Here is what I do;

1. I use CommSec Pocket to invest in iShares Core ASX200 ETF (Ticker: IOZ) _All my superannuation is in an international index fund, so I wanted some Australian exposure._

2. I started out with a $1000 initial investment and then I dollar cost average $250 per month into it. Brokerage fees are $2 per transaction so by investing $250 per month I can keep that cost under 1%.

This works great for me. I don't have to think about what to invest in or when. It's all automatic and the funds get direct debited out of my CBA bank account once a month. Easy and it allows me to get on with the more important things in my life.

Also, if you do have time, read the book *'The Little Book of Common Sense Investing' by John C. Bogle*. Simple to understand and it will explain a lot.


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## over9k (17 April 2021)

Ben Gordon said:


> Index fund is your recommendation?



Yes. 




Just FYI, I only own one stock directly. Literally every single investment I have bar one is a 3x leveraged ETF.

SPXL is, in my opinion, what you should just keep buying.


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## basilio (17 April 2021)

over9k said:


> Yes.
> 
> 
> 
> ...




WOW!!  The Holy Grail of investing and making out like a bandit...  
Seems like one simply needs to hand over our funds to is 3x  leveraged  ETF and their  clinical application of derivatives etc will ensure an onward march to prosperity.
I noted that their fund *only began at the bottom of the  2008* crash looks very rosy to date.

I was also fascinated to see how they back dated their hypothetical returns to show how they could/would have make a bundle if they had been operating  from the distant past. Interesting indeed.

It does seem like an alluring prospect. But i feel uneasy about the assumption that somehow all these trades will happen in the right way.
Just my thoughts.

The last person I remember who offered a guaranteed return on the stock market was Bernie Madoff .  And he ceratinly had very respectable persuasive story.








						Bernie Madoff: Who He Was, How His Ponzi Scheme Worked
					

Bernie Madoff was an American financier who ran a multibillion-dollar Ponzi scheme that is considered the largest financial fraud of all time.




					www.investopedia.com
				











						3 Triple-Leveraged ETFs, and Why You Shouldn't Buy Any of Them | The Motley Fool
					

It may sound like a good idea to multiply your investment dollars by three, but here's what you should know.




					www.fool.com


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## Ben Gordon (17 April 2021)

I put some money into vanguard 😉 thanks everyone


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## dyna (17 April 2021)

Yeah,for the time poor and just about anybody else,for that matter,ETF's are the way to go.They  survived the  Covid crash and safely sailed through the GFC before that,so they're really here to stay now and the sector's value has just passed the $100 Billion milestone. Why pay a lot more for so-called active management that mostly can't even beat the index? Why even bother trawling through the market's share prices trying to do it yourself ?...... (I only do it for fun and to pretend I still have a proper job.)


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## Value Collector (17 April 2021)

Ben Gordon said:


> Index fund is your recommendation?




I think specifically a whole of market type Index fund, when you buy into VAS and VGS as I mentioned (there are others also that are very similar) you end up being invested in over 3000 of the worlds largest companies.

You will have a hassle free investment where you are invested in everything from Apple, Microsoft, Google, Netflix, Disney, Facebook and Amazon through to names you have never heard off that produce cement in Texas, Electricity in California, computer chips in Japan, copper in South America, etc etc etc. You will basically be exposed to the entire global economy.

No need to worry if people are buying iPhones or Galaxies because you own both Apple and Samsung, it doesn't matter if people drink Coke or Pepsi because you own both etc etc, you will get dividends every 3 months that should grow over time that you can use to continue buying more units in the index and increase your (and your kids) ownership of global business.


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## Value Collector (17 April 2021)

dyna said:


> Yeah,for the time poor and just about anybody else,for that matter,ETF's are the way to go.They  survived the  Covid crash and safely sailed through the GFC before that,so they're really here to stay now and the sector's value has just passed the $100 Billion milestone. Why pay a lot more for so-called active management that mostly can't even beat the index? Why even bother trawling through the market's share prices trying to do it yourself ?...... (I only do it for fun and to pretend I still have a proper job.)



Agreed, unless you have the time and willingness to bring a level of intensity and emotional stability that will allow you to beat the market consistently over time, Index fund ETF's are the way to go.

I am an Active investor myself, But if I started under performing the market or no longer had the time I would go the index route for sure.

Mine and my partners Super is actually 100% in the Global index, because I don't trust any other active managers except my self, and if I die my wife will be putting all of our investments into the index.


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## over9k (17 April 2021)

basilio said:


> WOW!!  The Holy Grail of investing and making out like a bandit...
> Seems like one simply needs to hand over our funds to is 3x  leveraged  ETF and their  clinical application of derivatives etc will ensure an onward march to prosperity.
> I noted that their fund *only began at the bottom of the  2008* crash looks very rosy to date.
> 
> ...



Madoff was a fraudster. ETF's are not fraud.


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## Value Collector (17 April 2021)

over9k said:


> Madoff was a fraudster. ETF's are not fraud.



Well, Just because because a fund is traded on an exchange (eg ETF), doesn’t guarantee it will be free from fraud or is not going to make unwise investment choices or blow its self up with leverage.

exchange traded funds are are great low cost easy way to access various investment funds, but you do still have to make sure you are investing in a good fund.

hence why I have suggest here going for the Vanguard whole of market index funds.

Yes you can access this fund via an ETF, but there are all sorts of other ETFs that have crazy investment strategies that I wouldn’t touch with a 6 foot pole.

The ETF form itself does not gurantee safety, all it tells you is that the fund has its units traded on a public exchange, you still have to make sure the strategy of that fund is sound.


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## over9k (17 April 2021)

Which is no different to saying that being a publicly traded company does not guarantee safety and you need to do your DD and check how it's audited etc etc. 

I wouldn't hesitate to buy an etf from any of the big names.


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## Value Collector (18 April 2021)

over9k said:


> Which is no different to saying that being a publicly traded company does not guarantee safety and you need to do your DD and check how it's audited etc etc.



Exactly, but when you said "_Madoff was a fraudster. ETF's are not fraud_", it sounded like you were suggest that the ETF structure it's self was some sort of protection from fraud, but as you would probably know  Fraud has brought down everything from Publicly traded companies to Bonds etc, so that sentence doesn't really make sense.

I just want to point out to anyone that reads this thread now or in the future that an ETF is just like a bucket, you have to make sure you understand and are comfortable buying the stuff* in* the bucket, not just buy because its a bucket, because some of the buckets are filled with gold some are filled with crap.




> I wouldn't hesitate to buy an etf from any of the big names.



At the end of the day Wall Street will sell you anything they think you will buy and they can earn a fee on.

I am not saying the big names will commit fraud, but they are certainly not shy about filling a bucket with Fads and gimmicks and marketing it for a fee, so buyer beware what's hot and fashionable today might not be so next year.

Also, if a fund is using a lot of leverage, the ETF structure won't stop the underlying fund blowing up if the market goes in the wrong direction, but the fund manager will earn fat fees while it goes well, and not lose anything when it blows up.


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## over9k (18 April 2021)

Seems we have another thread where you're keen to peacock and/or have an argument VC.


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## Value Collector (18 April 2021)

over9k said:


> Seems we have another thread where you're keen to peacock and/or have an argument VC.



Huh??? 
Every single post I have made in this thread has been either answering a question or explaining something fundamental about investing.

If you have a problem with some one making a small but important critique on your comment if they notice something important that could be misunderstood by a beginner then I think you are being a bit fragile.


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## Gunnerguy (1 May 2021)

To be really simple, cheap, and set and forget for 10-20 years I would just dollar cost average 50% USSnP, 30% QQQ, 20% AX200, 20% Emerging.
Got to have more International than Australian.

Gunnerguy


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## Value Collector (1 May 2021)

Gunnerguy said:


> To be really simple, cheap, and set and forget for 10-20 years I would just dollar cost average 50% USSnP, 30% QQQ, 20% AX200, 20% Emerging.
> Got to have more International than Australian.
> 
> Gunnerguy



But that adds up to 120% ??? Also do you want to explain what each one is and why you recommend them?


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## Dona Ferentes (1 May 2021)

Value Collector said:


> But that adds up to 120% ??? Also do you want to explain what each one is and why you recommend them?



Please don't explain, gun


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## Gunnerguy (1 May 2021)

Belli said:


> No suggestions for you on where to invest the funds you have for your children but be aware of this
> 
> 
> 
> ...



TT in your will is a great way to help out in the future. I agree !!


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## Gunnerguy (1 May 2021)

Value Collector said:


> But that adds up to 120% ??? Also do you want to explain what each one is and why you recommend them?



Sorry maths got messed up.
60% SnP - US is the largest market, briars, reserve currency, ‘democratic’, less risky than any detailed thematic ETF.
20% QQQ - Nasdaq, future technology growth.
10% Emerging - Population growth in Asia, higher return but higher risk than the above 2.
10% Oz - Local currency, but a Small focussed market, resources, banking, and Housing. Might even use this 10% for  emerging instead but Oz resources over the long term with growing global population I guess you need to keep it in.
At the end of the day IMHO, a diversified Indexed International stock portfolio is best. The more focussed the more risk/return and one doesn’t know which sector (apart from probably US Tech) will do well long term, so the above would be for long term growth. There are hundreds of ETF’s out there. It’s horses for courses as to the percentages, but I would have International >Australian.  At least they are the best long term asset category of all those possible. Set and forget. If one wants to be active then that opens a whole other dilemma.
All IMHO, DYOR, just trying to help.
Enough explanation Value Collector ?
Gunnerguy


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## Ben Gordon (1 May 2021)

Gunnerguy said:


> Sorry maths got messed up.
> 60% SnP - US is the largest market, briars, reserve currency, ‘democratic’, less risky than any detailed thematic ETF.
> 20% QQQ - Nasdaq, future technology growth.
> 10% Emerging - Population growth in Asia, higher return but higher risk than the above 2.
> ...



So I have 1200 in VAS which is a vanguard Australia index. I should also put some money into the international index also is what your saying?


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## Gunnerguy (1 May 2021)

Craton said:


> G'day Ben and welcome.
> Juz my  worth.
> 
> Have you consulted a Financial Adviser?
> ...



Insurance Bonds I believe. Simply put, Kids are beneficiaries parent contributes, monthly (?). Day you start at age 3. 10 years contributions then ‘matures’. Beneficiary, kid, can then pay for school or Uni. Invested in what assets/funds the contributor decides, and what the bond offers. Internally  taxed  at Corp Tax rate,  but at maturity no tax to beneficiaries. Contributions set at what the contributor wants at start (eg. $100 Pm), if you want to contribute more in say year 3, at $200pm, you have to stay at $200 for the Term, ie, if you increase the contribution you can’t reduce in the future. This is what I know from my studies, but may be 2 years out of date.
NOT ADVICE, DYOR.
Ginnerguy
(M.FinP)


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## Gunnerguy (1 May 2021)

dyna said:


> Yeah,for the time poor and just about anybody else,for that matter,ETF's are the way to go.They  survived the  Covid crash and safely sailed through the GFC before that,so they're really here to stay now and the sector's value has just passed the $100 Billion milestone. Why pay a lot more for so-called active management that mostly can't even beat the index? Why even bother trawling through the market's share prices trying to do it yourself ?...... (I only do it for fun and to pretend I still have a proper job.)



I’m with you Dyna. 80% Index/thematic and rebalance every 6 or 12 months or at a reversal , then 10% play money ‘to try to pick winners and beat the market’, and 10% cash.


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## systematic (1 May 2021)

Ben Gordon said:


> So I have 1200 in VAS which is a vanguard Australia index. I should also put some money into the international index also is what your saying?



Here’s the thing. 

The point of agnostic investing is to be honest and say you don’t know what’s going to go well. But overall you hope the world will keep growing, so you buy a bit of ‘everything.’  

 As you learn, you might nuance it.

So...buying VAS is buying a bit of everything, in Australian equities. But what if you don’t know that Australia is going to go well? Our market has gone very well over a long time...will it continue?

Think of it from top down. The most agnostic might be to buy a bit of all the assets, all across the world.
Buying equities only is a decision to concentrate your allocation. Buying Australian equities makes another decision (you’re effectively choosing Australia over all the other countries).  

Don’t misread me: that’s not necessarily a bad thing! But have some reason and thinking behind the decision. 
If I invested in VAS it might be because (a) I think public equities will do well over the long term and is a practical option ‘better’ than bonds, gold, other assets for my limited capital; and (b) I think Australia will continue to do well, plus I plan to spend Aussie dollars (as I don’t plan to move) so my future needs also tie nicely to being overweight domestic stocks.

That’s why I pressed back a big at tech/a’s response (he has thick skin, he can take it).  Not because he’s wrong. Crypto along with iron ore and whatever else it was, might be the outperforming allocation over the next decade or two. He’s probably smart enough to know. But what if he’s wrong, as unlikely as that might be? 
That’s what the agnostic investor wonders. So, they go more broad than that.

So, back to you. Do you believe in stocks over property, bonds etc? And you’re happy to bet that Australia’s market  won’t be a dud over the next couple decades?   I hope you would say yes to both...because you’ve already said it (by buying VAS).

By the way: the above is all just food for thought! 🙂


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## over9k (2 May 2021)

Ben Gordon said:


> So I have 1200 in VAS which is a vanguard Australia index. I should also put some money into the international index also is what your saying?



Correct. America's demographics are much better than everyone else in the first world and therefore a much better long term bet. You can invest into the S&P 500 index directly via the australian securities exchange with a leveraged ETF under the ticker of "GGUS".

I hold a significant amount of this myself 


If you don't want to run the higher risk of a leveraged ETF, the normal one is IVV. 

A leveraged etf just moves at 2-3x the market - so if the market went up by 5% it would go up by 15%, but if the market went down by 5%, it would go down by 15%.


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## Value Collector (2 May 2021)

Ben Gordon said:


> So I have 1200 in VAS which is a vanguard Australia index. I should also put some money into the international index also is what your saying?



I would, I have my superannuation set at 50% VAS and 50% VGS (VGS is the global index).

By putting some funds into the VGS you will have exposure to all the big names around the globe, eg Apple, Google, Microsoft, Samsung, Coke, Pepsi, Disney, Walmart, McDonald’s, etc etc etc about 3000 companies in total.


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## Smurf1976 (2 May 2021)

Value Collector said:


> By putting some funds into the VGS you will have exposure to all the big names around the globe, eg Apple, Google, Microsoft, Samsung, Coke, Pepsi, Disney, Walmart, McDonald’s, etc etc etc about 3000 companies in total.



Another option to consider would be currency hedged ETF's.

That way you're getting exposure to whatever international market without the risk of the exchange rate moving against you.


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## Craton (2 May 2021)

Gunnerguy said:


> Insurance Bonds I believe. Simply put, Kids are beneficiaries parent contributes, monthly (?). Day you start at age 3. 10 years contributions then ‘matures’. Beneficiary, kid, can then pay for school or Uni. Invested in what assets/funds the contributor decides, and what the bond offers. Internally  taxed  at Corp Tax rate,  but at maturity no tax to beneficiaries. Contributions set at what the contributor wants at start (eg. $100 Pm), if you want to contribute more in say year 3, at $200pm, you have to stay at $200 for the Term, ie, if you increase the contribution you can’t reduce in the future. This is what I know from my studies, but may be 2 years out of date.
> NOT ADVICE, DYOR.
> Ginnerguy
> (M.FinP)




Thanks mate.
These weren't called Insurance Bonds back in early 1980's. Could start anytime after birth, term length 18, 21 or 25 yrs, had to pick one. Might have been a one off $100 min. to start/open the policy then min. contribution $20 per month which was indexed to CPI adjusted yearly.

Might see if the old doco's are around some place.
Cheers.


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## Gunnerguy (2 May 2021)

Craton said:


> Thanks mate.
> These weren't called Insurance Bonds back in early 1980's. Could start anytime after birth, term length 18, 21 or 25 yrs, had to pick one. Might have been a one off $100 min. to start/open the policy then min. contribution $20 per month which was indexed to CPI adjusted yearly.
> 
> Might see if the old doco's are around some place.
> Cheers.



Craton,
Nope I’m talking about Investment bonds also known as child/education bonds. Here in Oz. 10 years to maturity, 30% tax. Minimum generally $500 py. You can increase contributions by up to 125% per year max but have to keep it at that rate for future years.
Gunnerguy


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## Belli (2 May 2021)

Gunnerguy said:


> Investment bonds









__





						Lifeplan Investment Bond | Australian Unity
					

A comprehensive, versatile & tax effective investment bond, which can be used to build wealth, without increasing your personal income tax liability.




					www.australianunity.com.au
				




Various options.  Some have used, or are using, the LifePlan offer from this provider to avoid estate disputes.  I understand the bonds do not form part of the deceased estate and go directly to a nominated beneficiary.  A way of trying to negate the vultures descending on the asserts in a Will.


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## sptrawler (2 May 2021)

Gunnerguy said:


> Insurance Bonds I believe. Simply put, Kids are beneficiaries parent contributes, monthly (?). Day you start at age 3. 10 years contributions then ‘matures’. Beneficiary, kid, can then pay for school or Uni. Invested in what assets/funds the contributor decides, and what the bond offers. Internally  taxed  at Corp Tax rate,  but at maturity no tax to beneficiaries. Contributions set at what the contributor wants at start (eg. $100 Pm), if you want to contribute more in say year 3, at $200pm, you have to stay at $200 for the Term, ie, if you increase the contribution you can’t reduce in the future. This is what I know from my studies, but may be 2 years out of date.
> NOT ADVICE, DYOR.
> Ginnerguy
> (M.FinP)



My one experience with insurance bonds was way back in 1987-88-89 from memory, it was after the huge stock market crash, it was my first venture into market funds.
I waited until the insurance bonds I had chosen showed a glimmer of recovery and bought in, I then watched their unit price go nowhere  for three years, while the market recovered heaps.
So I cashed them in, didn't lose anything but didn't gain anything either, so I would say do your research well.
Maybe things have changed, I've never looked at them since, so these days they may be more transparent than they were. 
Just my experience, others may have done very well with them.


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## Gunnerguy (2 May 2021)

sptrawler said:


> My one experience with insurance bonds was way back in 1987-88-89 from memory, it was after the huge stock market crash, it was my first venture into market funds.
> I waited until the insurance bonds I had chosen showed a glimmer of recovery and bought in, I then watched their unit price go nowhere  for three years, while the market recovered heaps.
> So I cashed them in, didn't lose anything but didn't gain anything either, so I would say do your research well.
> Maybe things have changed, I've never looked at them since, so these days they may be more transparent than they were.
> Just my experience, others may have done very well with them.



I looked at them closely 2-3 years ago. They are very different from years ago, more choice for the contributor to select what funds to invest in.
I didn’t like to internal 30% tax rate but that was because my MTR was much lower. For someone in the +45% tax band and very young kids it may be worth looking at.
I believe there are several options available and there maybe something suitable to the original poster.
I’m not an FA, not is this advice, DYOR.
Gunnerguy


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## Value Collector (2 May 2021)

Smurf1976 said:


> That way you're getting exposure to whatever international market without the risk of the exchange rate moving against you.




Yes, buying into a hedged fund takes away the currency fluctuation risk, which I would recommend if it was a shorter term hold.

However, hedging costs money and this is going to be funded by diverting some of the funds income away from your pocket and into the pocket of those providing the insurance.

So, atleast it my opinion, if you plan to hold the international index for quite a while, it is best to accept the currency volatility and take  the unhedged version, and have the currency risk covered by the additional income you will receive.

there is a 50/50 chance the currency might even move in your favour, and create a windfall additional profit on top of your investment profit.


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## over9k (3 May 2021)

Smurf1976 said:


> Another option to consider would be currency hedged ETF's.
> 
> That way you're getting exposure to whatever international market without the risk of the exchange rate moving against you.



GGUS is currency hedged


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## Belli (3 May 2021)

An afterthought.  It could be wise if investing on behalf of your children to reinforce they should keep quiet about it.  Otherwise they may find they attract undesirables.  It can happen.


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