Saving for my kids...

[tech/a]

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.

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

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.

 

[againsthegrain]

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

 

[frugal.rock]

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.

 

[Value Collector]

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.

 

[againsthegrain]

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.

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

 

[Ben Gordon]

Thanks all for your advice and time

 

[Craton]

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.

 

[Value Collector]

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.

 

[Warr87]

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).

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.

 

[againsthegrain]

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

 

[tech/a]

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

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.

 

[Value Collector]

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

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.

 

[Value Collector]

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.

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.

 

[jbocker]

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.

 

[over9k]

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.

 

[Ben Gordon]

View attachment 122897View attachment 122895View attachment 122896



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.

Index fund is your recommendation?

 

[over9k]

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

 

[Cam019]

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.

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.

 

[over9k]

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.

 

[basilio]

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.

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 and 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