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  1. #1
    Junior Member
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    Default Investment strategies for newborn

    Hi guys

    New to the forum and just wanted to get a bit of advise.
    We have an 8 month old and I wanted to get her saving early so she could start investing. My wife and I opened her an account under her name and started putting $25 per week aside.
    She now has $800 in her account and we were thinking of making her first investment through smart shares.
    Investing the minimum $500 then $50 per month into the same fund maybe FNZ.NZX?. Letting the other $50 per month build up to $500 then investing that.

    My wife and I are new to investing but with the small portfolio we have in the stock market we have been very impressed with the results.

    As our daughters investments will be over a long period 20+ years before it will be touched I would love if any thoughts or other ideas on investing for her future.

    Thanks

  2. #2
    Dilettante
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    Your daughter will be very thankful for you one day if you do this. With the situation and plan you describe, I think it would be very hard to beat regular investments into the S&P500 through Smartshares https://smartshares.co.nz/, Sharesies https://www.sharesies.nz/ or Hatch https://www.hatchinvest.nz/

  3. #3
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    I would go for sharesies. You can invest as little as $5 with no start up fee. You could get huge diversification for her. They do have fees but is it only .75 cents a month for kids. I do it for my daugther.

  4. #4
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    ETF tracker....or trackers....can't predict the future and there will be at least 20 yrs before she needs anything. Countries and economies can move drastically, companies can become obsolete, so for that timeframe a regular into three or four ETFs that reflect asset class AND has a global reach. If it were 5 to 10 years, the approach could be a tad more predictable.

  5. #5
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    We do this one for our 7 month old daughter.

    Good place for grandparents etc to put gifts too.

    https://www.superlife.co.nz/invest-for-children

  6. #6
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    Default Congratulations!

    Congratulations @Jamesw, both on the arrival of your daughter and taking some proactive steps towards giving her a great head start.

    Cooperative Bank Youth accounts are I think currently the best available (did require me becoming a member with a zero balance savings acc.) which earn 3% interest on the first $4000 deposited, and 0.75% on anything over $4000. I think it's the best child account around at the moment and it may suit your needs, at least initially. (Youth account is zero fees for anything and is up to the age of 12!)

    If you go down the shares route I'd advise against buying in your child's name (e.g. getting them a CSN etc) as it'll just cause grief later if you want to sell quickly, or at all. Nothing in NZ seems well setup for children as the admin is always done under the guise of the guardian's account. A good example is Westpac online term deposit setup, works... but defaults to guardian's tax rate, requiring a phone call and several days to fix.

    You didn't mention it, so apologies if you know this already, but the government's BestStart plan is a must have, everyone gets it for the first year and then there's an eligibility requirement after that; https://www.ird.govt.nz/topics/worki...out-best-start

  7. #7
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    Can’t see any details of fund options/fees etc for this. Seems you have to sign up in order to see any of that info.

    Quote Originally Posted by epower View Post
    We do this one for our 7 month old daughter.

    Good place for grandparents etc to put gifts too.

    https://www.superlife.co.nz/invest-for-children

  8. #8
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    In my opinion, with the narrow scope of investment choices for newborns in NZ (compared to places like Canada and abroad), I would not bother. The amounts are too small.

    You would be far better to take those funds and use it to invest it into your OWN investments. When the time comes your child is old enough, you can 'gift' part of the proceeds. As in previous posts, the issue of compliance, paperwork, regulation, just doesn't warrant to have another separate dedicated account; especially when the amounts are quite small.

    I am biased because the Canadian model for allowing newborns and the young / teens is immense. Such as RDSP and TFSA - all have a focus of TAX FREE compounding. Even relatives and friends can make the gifted contributions for which in some registered plans, the gov't matches the amount to the account holder. Gosh.. there's a LOT of things Jacinda Ardern could learn about how Canada is addressing how people get into their 1st home, tax laws that encourage the poor / low income to invest. Of course we are in NZ so all this is moot interest but would be glad to see something done more in NZ in this area.

  9. #9
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    By signing them up for Aggressive Kiwisaver when they turn 17 and contributing $1100/year to age 65 then they will have
    At age 65, they could have: $200,517.00
    From 65 until age 90, this would give them: $250.00 per week

    Worth considering IMHO

    Try sorted website,see attached

    https://sorted.org.nz/tools/kiwisave...ngs-calculator
    Last edited by kiora; 16-02-2020 at 10:16 AM.

  10. #10
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    Quote Originally Posted by kiora View Post
    By signing them up for Aggressive Kiwisaver when they turn 17 and contributing $1100/year to age 65 then they will have
    At age 65, they could have: $200,517.00
    From 65 until age 90, this would give them: $250.00 per week

    Worth considering IMHO

    Try sorted website,see attached

    https://sorted.org.nz/tools/kiwisave...ngs-calculator
    It's a load of rubbish because they're based on 'static' assumptions. That's not how the finance works in the real world as you have years that are positive and years that are negative. You also have to factor inflation (which the NZ gov't doesn't have a gasp of 'indexing' payments to a CPI figure every year). Then you have to factor administration costs and taxation ; a key issue that is not spelled out well by various Kiwi Saver funds.

    What is $250/week going to buy in 47 years time?

  11. #11
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    You are always so down on everything. We live in NZ. We have to work with what we’ve got and make the best we can of it. It’s not a “load of rubbish” actually, and $250 a week will be a damned sight better than nothing. Your constantly negative comments about our financial systems etc, and your impractical investment suggestions are not particularly helpful. We are all aware of your feelings/criticisms. Maybe just give it a rest for a bit.

    Quote Originally Posted by SBQ View Post
    It's a load of rubbish because they're based on 'static' assumptions. That's not how the finance works in the real world as you have years that are positive and years that are negative. You also have to factor inflation (which the NZ gov't doesn't have a gasp of 'indexing' payments to a CPI figure every year). Then you have to factor administration costs and taxation ; a key issue that is not spelled out well by various Kiwi Saver funds.

    What is $250/week going to buy in 47 years time?

  12. #12
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    Quote Originally Posted by justakiwi View Post
    You are always so down on everything. We live in NZ. We have to work with what we’ve got and make the best we can of it. It’s not a “load of rubbish” actually, and $250 a week will be a damned sight better than nothing. Your constantly negative comments about our financial systems etc, and your impractical investment suggestions are not particularly helpful. We are all aware of your feelings/criticisms. Maybe just give it a rest for a bit.
    First, my apologies for my negativity. I've found the whole NZ marketing about savings and investing has seem to "pulled the wool over their eyes" because i've never seen such differences on investing abroad.

    Second, if you're not reading between the lines, investing should not start with a small sum. Ask any financial advisor and they will agree that you need a decent amount to make it work because of inefficiencies like mgt & administration fees. What's even more blatant is the lack of transparency when financial advisor pitch at you all the scenarios and how much you will get at the end ; yet none will be held accountable in 10 or 40 years time.

    It's very reasonable to question what $250 buy you in 47 years time? If we look at $20/week today, have a look at history and figure out what dollar terms would that equate to 50 years ago? If it costs $8 to buy a pie at a dairy today, how much would that same pie be in 1970? The investments you're making HAS to beat inflation, but in your case, dealing in a small amount, you've kinda not even reached the gate before the races can start. The more logical choice is if you want to provide something for your children, do what many others have done... pay off the mortgage, when you reach retirement and move into an elderly group home, and then gift the house to your children. Not to mention they would benefit from tax free capital gains vs Kiwi Saver portfolio ETFs that would be subjected to taxes year after year. This is my hard case, others are more than welcome to run the #s down and prove me wrong.

    Yesterday I ran into a financial advisor (who was also and accountant and did some trust planning) at a local neighbourly gathering. My issue was very clear on why NZ's tax field was so different between the individual that invests directly vs the individual giving their $ to a managed fund to what Warren Buffet would say, "essentially buy the SAME thing.. but is allowed to charge a fee". Do I have a problem with this kind of arrangement? You bet I do! and so does Warren Buffet because on most part, they're essentially charging a fee for 99% of the time they're doing nothing. Do some YouTube searches on how Buffet spews all over these fund managers who think they can do better for their clients, then come back to me and tell me what i've said before is wrong. Anyways, going back to the financial advisor I met, I was hitting him hard on by asking why? No other country in the world discriminates their tax payer so much when it comes to investing. Then I started barrelling on about the NZ FMA. It was clear he knew exactly what I was talking about and i'm quite certain he doesn't get customers asking these types of questions. You know he told me about how unique is buying NZ shares that can be fully imputed on dividend credits...(which fuels the craze of NZ share investors wanting dividends over tax free capital gains) and then I explained why the liquidity on the NZX is dwindling which was tied in to NZ's FMA making overseas brokers to close off the NZ market for investments. The he said NZ is a small country - yes I agree.. but so is Singapore and Switzerland.

    So going back to investing for a newborn? Buffet would agree, you would be better off using the funds to invest in your child's education as that would have the biggest impact in their entire lifetime than to leave a small pot of $ to them at the end.

  13. #13
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    OK. Got it. As far as you're concerned I am wasting my time even trying to improve my financial situation by investing. I disagree with you 100%.

    I do NOT own a house or any other property. I have next to no assets, as you would know if you had properly read my many other posts. I am trying to improve my situation as much as I am able. At 59, I don't have too many options. I don't have any sugar daddies hammering on my caravan door. What bugs me about you and your comments, is your apparent inability to understand MY situation ( and probably other people's too). I am so far removed from everyone else here in terms of pretty much everything - job/income, financial situation, possession of "stuff" and investment. But I am still an investor. Doing the best I can under the circumstances. So sorry, but don't you dare tell me I am wasting my time because I don't have enough money! I have falsely believed that for over 30 years. If I had understood what I do now, I would have started investing back then and would now be in a significantly better position.

    You need to encourage people, not make them feel like idiots and failures. People like me are the ones who most need to get into investing and as far as I'm concerned, better late than never.

    Quote Originally Posted by SBQ View Post
    Second, if you're not reading between the lines, investing should not start with a small sum. Ask any financial advisor and they will agree that you need a decent amount to make it work because of inefficiencies like mgt & administration fees.

    The investments you're making HAS to beat inflation, but in your case, dealing in a small amount, you've kinda not even reached the gate before the races can start.
    Last edited by justakiwi; 16-02-2020 at 02:29 PM.

  14. #14
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    Quote Originally Posted by SBQ View Post
    .

    So going back to investing for a newborn? Buffet would agree, you would be better off using the funds to invest in your child's education as that would have the biggest impact in their entire lifetime than to leave a small pot of $ to them at the end.
    Listener front page says ones DNA has more influence on children’s success than good parenting or education.
    “Just consider that maybe the probability of you being wrong is higher than you think.”

  15. #15
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    Quote Originally Posted by winner69 View Post
    Listener front page says ones DNA has more influence on children’s success than good parenting or education.
    Then the explanation why there are so many private schools in NZ? I have cousins that are so staunch at sending their kids to anything but public schools, 1 case all 3 children going to 3 different schools.

    But academic success is 1 thing, what Buffet is teaching to little ones in finance is not taught at schools. He points out simple things like what assets appreciate and what assets depreciate ; you don't need to be a rocket science to understand this (even the lowly IQ person can learn the difference), yet the biggest problem we find is the subject of 'finance' seems to be too taboo to talk about in general day to day living vs the All Blacks game.

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