Are you investing for your kids?


Jack Derwin

October 26th 2021 3 minute read

There is nothing quite like having kids to get you planning for the future.

After all, kids are expensive, and parents understandably want to be able to give them every opportunity, no matter where life takes them. 

Whether it’s paying off student debts, putting together a first home deposit, or maybe helping them start their own business, the possibilities – and the expenses – are endless.

Thankfully some early planning and a few good investment decisions today can really pay off tomorrow. 

Why should I invest for my kids?

Some people buy bottles of French champagne or scotch whiskey to commemorate the birth of their kids – usually with the intention to drink them when they come of age. But what if you invested on their behalf instead?

While a wine’s flavour profile may mature over the years, investments can do significantly more over that same period. Your children may also appreciate the windfall of the latter far more by their 18th birthday than, say, the depth of that vintage Bordeaux. 

Plus, if you get them involved, it can be a great opportunity to teach your kids about money and investing in the future, setting them up for financial success later in life.

How much do I need to start?

Fortunately you don’t typically need a lot to get started. With enough time, money in the sharemarket has the potential to grow enormously.

Australian shares for example have returned an average of 8.55% annually over the last three decades. If you invested $100 a month for your child over 18 years, and achieved the average ASX return, you would have $47,857. If you kept it in for seven more years, until their 25th birthday, that becomes $95,877.

U.S. shares have performed even better historically, producing a long-term average annual return of 10.7%. That is enough to turn your monthly $100 investment into $59,305 by the time they’re allowed to open the Burgundy. Over 25 years, that investment would grow to $132,448. 

While past performance is no guarantee of future results, it indicates the advantages of investing for the long-term as well as the power of compounding over the course of years.

Investment options

As the above returns indicate, there’s no need to complicate things.

By investing in an index fund or ETF that tracks a broader share market, your children’s wealth can be invested in a diversified way that carries less risk long term than picking individual stocks. Canstar provides a list of ETFs available on the Australian stock market.

Investing with Superhero

It’s never been easier to invest on their behalf with Superhero.

Customers can simply set up a dedicated account and invest on their kids behalf the same way they would for themselves. 

The best part is that when they come of age, you’ll easily be able to transfer the portfolio over to them to manage themselves. If they don’t have a burning desire to use it, they can simply grow it further or even add to it themselves.

Setting up a minor’s account is simple. You just need to:

  1. Log in to your Superhero account
  2. Click on the ‘Profile’ tab within your Superhero account.
  3. Click ‘Add Account’ followed by ‘Minor Account’ on the top of the page.

Once the account has been created, it will show up under your account types. You can see this by clicking on your name in the top left of the screen.

If you have more than one child you’d like to set up an account for, you can simply repeat this process from your Profile.

Upcoming webinar

Join our free webinar to learn how to start investing for your kids.
Date: Wednesday 23 November 2021
Time: 12:30pm – 1:30pm (AEDT)
Register here.

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