Becoming a parent or a grandparent is an exciting time. While investing might not be the first thing on your mind as you welcome in the newest member of the family – it should be something that you start planning for sooner rather than later.
Most people have heard of the popular Commonwealth Bank “Dollarmite” savings accounts for kids. Many new parents will almost automatically open a bank account for their newborn and deposit some savings for their child, along with money often received for Birthday’s, Christmas and the like. But did you know that this popular Dollarmite account pays around 2.10% in interest – and only if you make a deposit each month and make no withdrawals. If you don’t meet those criteria – you only receive approximately 0.15% in interest which isn’t very attractive.
Instead of the typical bank account – have you ever considered investing in shares to save for your child or grandchild’s future?
Did you know that you could buy some ordinary Commonwealth Bank shares for your child and receive a return of about 7.2%* (gross yield including franking) That fact is certainly not something that comes with the advertising material for the bank account!
I often say that the banks are there to look after their shareholders, not their customers. Why be a customer receiving just 2.1%, when you could be a shareholder receiving 7.2%?
A key to investment success is ‘time in the market’. One thing children have working in their favour is time. This is where the concept of our ‘iInvest for Kids’ program comes about.
Our iInvest for Kids program has helped many parents and grandparents put a simple investment plan in place. It’s a savings plan, combined with a share purchase plan, that is affordable and flexible.
An investment of as little as $2 per day in an ‘iInvest for Kids’ account could help your child fund their university degree or build a deposit for their first home. An iInvest for Kids account is about teaching your children that if you take care of the pennies, the pounds will take care of themselves.
With average returns in the share market of 1.8% every three months, or 7.2% annually – an iInvest for Kids account can help you build an investment portfolio for your child that will grow as they do.
It’s getting more and more expensive to live in Australia, and by the time your little ones venture into adulthood, cost of living pressures will have greatly increased compared to today. Today’s millennials are having a hard time saving for their future – so it’s important to start saving now to give the next generation a head start. It’s also important to lead by example to teach your children how to save and invest for their future. The iInvest for Kids account is the perfect tool to help your child learn about saving and investing. If they can learn these habits early, this will hold them in good stead for their financial future.
Help give your children a head start and a gift that will last a lifetime.
Georgia Harrison, Equities & Derivatives Adviser, ADA2 (ASX)
iInvest Securities, Stockbroking & Wealth Management
iInvest Securities Pty Ltd (ABN 44 246 838 283) (“iInvest”) does not guarantee or take responsibility for the accuracy, completeness, estimates or appropriateness of any information or statement of opinion (any of which may change without notice) set out in this communication.
This communication has been provided to you for your general information and does not take into account your objectives, financial situation and needs and must not be relied upon by you as personal financial product advice that has been provided to you by iInvest. If you require advice regarding any aspect of the information and statements of opinion set out in this communication, particularly as to whether you should base an investment decision upon the information or statements of opinion set out in this communication, please contact your financial adviser.
*Past performance is no guarantee of future performance.