Saving for my kids...

[Ben Gordon]

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

 

[tech/a]

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!

 

[Dona Ferentes]

compounding ... 8th wonder of the world.

 

[Ben Gordon]

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!

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

 

[Ben Gordon]

compounding ... 8th wonder of the world.

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

 

[tech/a]

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.

 

[Ben Gordon]

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?

 

[tech/a]

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!

 

[Value Collector]

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

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.

 

[Value Collector]

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.

 

[againsthegrain]

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

 

[Value Collector]

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

 

[againsthegrain]

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

 

[systematic]

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.

 

[Value Collector]

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.

 

[Belli]

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.

 

[tech/a]

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.

 

[Ben Gordon]

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.

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

 

[Value Collector]

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.

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

 

[systematic]

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.