Children’s investment strategies
(Investing for children)
Children’s investment strategies are based on similar principles to those for older investors, but with some subtleties in the elements of strategic planning. From time to time we are asked about investing for children’s futures. It is difficult to provide a ‘one size fits all’ response because, like most situations, individual family situations vary from client to client; and determining a financial future for a child without knowing and understanding their level of understanding of matters financial, let alone matters of ‘life’ can be quite a challenge.
The most difficult thing for financial planners in this arena, is that we are focused on providing strategic advice, whereas most enquirers in this topic are seeking product advice. That is not to say that we don’t ‘know the product’ – as you may understand from matters below, but the limiting of scope for advice may not result in the outcomes hoped for by the enquirer (usually a parent or grandparent).
Circumstances under which investing for children (by relatives/ adults on their behalf) might arise, include –
- Cash gifts from relatives or friends: often a once-off (or annual) event;
- Savings plans with either simple or strategic goals (for instance – Simple: may include saving to have a ‘good start’ in life at some designated age or event; Strategic: may include saving to ‘fund higher education’).
Children’s investment strategies: implemented with traditional investment products
Products that might be used, include –
- Direct shares parcel/ portfolio (or perhaps a Listed Investment Company – LIC)
- Managed investment funds portfolio
- Savings accounts
- Insurance bonds
- Scholarship accounts
Issues that need to be considered in selecting the appropriate investment product, include – accessability; taxation; security; liquidity; and suitability. There are a number of articles on our website that deal with some of these matters: go to our website Library page and type a subject name (see bold words above) in the Search bar to read what we have had to say about the matter.
Call our team – on 07 3421 3456 – or use our website to Contact Us to discuss whether there are matters in this article with which we can help you.
[First published in March 2010, this article has been occasionally refreshed and updated, most recently, in March 2017]
