Dec 14, 2021

Our insights

All parents want the best for their kids, including building them a life of financial freedom.

Perhaps part of this bigger goal is to gift them their first car, help them get a foot in the property market or fund their studies as they progress towards their dream career.

To plan for this, you need to start saving and investing now as today's financial decisions impact your child's future.

Your investment game plan will depend heavily on your child's age and what you hope to achieve. In addition, it will inform what level of risk you're able to withstand.

This savings strategy should evolve as they age and investments grow. Setting a strategy and then following up with regular check-ins with a qualified financial adviser can ensure you’re trending in the right direction.

Here’s some key considerations.

Short-term means savings

Generally, any financial goal that is less than three years away requires a conservative approach. Maybe you're saving for next year’s school fees? Then stay away from riskier investments and stick to consistently stashing cash away.

A financial expert can offer tips and advice to ensure you're getting the most out of this slower but far less risky approach.

Invest if under ten years

When you have more time on your side, having a clear investment strategy is crucial.

Under the bracket of medium-term investments, managed funds are a great option. As a parent, you can hold managed funds and other investments in a trust for a child and contribute to the fund when you can, almost like depositing money into a savings account.

ETFs offer the ability to build a diversified investment portfolio, allowing risk to be spread and increasing chances of success. The fees are also relatively low.

Once again, risk comes in to play. The longer you have, the more chance you can endure any short-term lows and be rewarded for it in the long run. 

Funds for the long term

The potential tax savings of investment or ‘insurance bonds' make this a potentially good long-term investment option for your children. Once your child reaches a certain age, the asset can be transferred to them.

However, you need to have at least ten years until the funds reach maturity, with no withdrawals made within the period. Fees can also be higher and worth watching out for.

Investing in property could also be a viable option. As the years go by it becomes more challenging for younger people to get into the market, so making property moves now will absolutely set them up for success.

Increase their aptitude for money

One of the best gifts you can give your children is to build their financial knowledge as one day, they'll need the financial maturity to manage what you've left them.

When they're young, chat about money, give them an allowance, help them save, and involve them in simple financial decisions. It's through everyday conversations around money that you can increase their financial savvy.

Make good decisions

There are tax and cost implications for investment accounts, so it pays to stay close to your accountant and financial adviser throughout the process to understand how you and your strategy could be impacted.

Regardless of your situation, start as early as possible. These savings compounded over time will help set your children up to thrive.

Talk to the team at Calder Wealth Management to discuss the best family investment strategy. Call us on (08) 8373 3333 to schedule your free initial appointment.

Written by Ben Calder at Calder Wealth Management.

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.