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Junior Member
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
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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/
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Member
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.
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Member
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.
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Member
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
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Member
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
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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.
Originally Posted by epower
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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.
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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 11:16 AM.
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Originally Posted by kiora
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?
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