When your baby is just born, investing is probably the LAST thing on your mind. But there’s no better time to start investing than right now.
When your little one is just born, parents and caregivers tend to be focused on the most necessary things that are required for the newborn baby such as nappies, feeding schedules a safe car seat etc. All these short term things are indeed important now. However not many people think ahead to 5, 10, or 20 years from now… which is something I want to talk about in this post.
My Investing Story
Being recently new to investing in the stock market myself (I only started investing less than five years ago) I now understand the importance of “getting in the market early”. Starting early, gives you a lot of time in the market. A lot of time to invest a little bit each time (or a lot) and just accumulate your wealth over time, without blinking an eye.
I wish my parents had told me about investing in the sharemarket, and I wish my parents had invested my childhood savings in the share market instead of just keeping it in a savings account (as the value would have accumulated over time!). But that wasn’t the case so in this post, I’ll share with you what we have done to invest for our daughter.
Why Should You Invest?
Investing your money wisely is a good catch phrase you might have heard often. But what does this actually mean? Here’s what it means to us:
- Investing is taking charge of your finances instead of inflation affecting you negatively
- Investing is learning something new
- Investing is being ‘responsible’ with your money
- Investing is accumulating your money
- Investing is putting your money into something that increases value over time
Other reasons why I invest my money:
- Investing in dividend shares gives me quarterly or annual dividend payments. These payments go straight into my bank account, and for some shares they are immediately reinvested into the company (this is called a dividend reinvestment plan).
- Learning about investing gave me a new interest to learn about and added a new skill. Continueed learning is something that we value very much in our unschooling journey so this is also a way to lead by example.
What can you invest in?
There are many ways to invest your money such as:
- shares
- bonds
- gold
- silver
- ETFS (exchange traded funds)
- oil
- property
- crypto currency
How to get started investing for your child?
I think one of the first things you have to decide is whether you will be managing the investment portfolio yourself, or whether you would prefer someone do it for you – a fund manager.
Speaking from personal experience, I was never educated in finance nor investing – so less than five years ago I taught myself how to invest in the sharemarket (both Australian and Overseas). I simply started reading books such as “Rich Dad Poor Dad by Robert Kiyosaki” and online articles and listened to “get started investing” podcast.
Which platform should I use to invest for my child?
Throughout my own investing journey, I researched the various platforms to use, including Plus500, NABTrade, CommSec, Superhero, Stake, and a few other apps, and after having tried all of them, I now know what works for our needs and have selected a few apps to continue using (I have consolidated all my shares into 3 various apps).
How to buy shares for your child in Australia?
After having personally tried a few platforms, I have now worked out the best platform to invest for my daughter. Yes, you can invest for your child, even though they are not 18 years of age.
Some platforms allow you to open a trust account in the name of an adult who will act as trustee (ATF) until the minor turns 18. Once the minor has turned 18, the shares can then be transferred into an account in their name. When you transfer shares out of the minor trust, you will need to complete an Off Market Transfer form
There are a few places where you can set up an investment account for your child with an adult parent as the trustee. My 3 favourite investing platforms are:
- Stake
- Nabtrade
- Superhero
Each platform I use for a different strategy. For example, all my shares held in nabtrade are my long-term portfolio (buy and hold).
Shares held in Stake app are USA shares that I was unable to get on nabtrade or Superhero. A few years ago when superhero app was just released, they only had access to the Australian market. They have only recently added the US market to their app.
Shares held in Superhero are used for “my working” portfolio so to speak. In this portfolio, I tend to be more active, focused on more buy and sell. What I love about this app is that the user has the ability to buy fractional shares, there is no minimum amount to spend on shares which is great if you’re just starting out and buying shares from your coffee change.
My investing journey started with “Rich Dad Poor Dad” by Robert Kiyosake.
My favourite platform for investing from my child is Nabtrade.
The reason I prefer NAB trade is because they are an Australian bank that has a support phone line if needed. Also, I was able to set up an account for my daughter with myself as a trustee, all simply online without having to go into a branch, speak to anyone, I’ll await any paperwork. It’s so easy because I bank with Nab with some of my banking as well so transferring money to the account is easy as well.
How should I invest money for my child?
There are so many ways to invest for your child and you will need to assess what is best for your situation. So the best thing is to discuss with your partner, friend, financial guru, and get a plan. Without a plan you’re flying blind (especially if you’re a beginner investor).
Personally we save up all our coins and put them into our child’s share account every few months. Then when the timing is right, I buy some blue chip shares for her and just ‘buy and hold’.
By the time she turns 18, there will be a nice amount of assets in her account.
On top of that I’m a big fan of buying gold and silver. The below video by Robert Kiyosaki explains why:
What is the best way to invest for your child in Australia?
One way of investing for your child in Australia, is investing in an Exchange Traded Fund (an ETF). This is basically a basket of shares, and you buy a piece of the basket so to speak, versus buying individual shares.
ETFs provide direct access to a wide range of investments such as Australian shares, international shares, bonds and metals.
There are also ETFs which contain worldwide shares, so if you are investing from Australia, using an Australian app / platform, this is a very easy way to “get access” to the international market.
Top Learning Resources To Get Started Investing
- Read the book Rich Dad Poor Dad by Robert Kiyosaki
- Listen to the Podcast “Get Started Investing”
The Wrap Up
The best time to start is now!
Educate yourself on how to get started investing, and level up so that you can invest for your child and teach your child how to handle money and how to invest wisely.
I’m definitely no finance guru or investment whizz, but I have taught myself how to get started investing, making sure I invest in blue chip shares such as BHP, RIO and CSL. I’m grateful that I gave myself a kick up the back a few years back to get started, as I feel confident that my money is making more in the sharemarket compared to having it in the bank.
