Investing money for our kids

F

flatout

Hi All,

This may not be the most appropriate place to ask but there seem to be some well informed folks here so here goes...

We have two small children. Since our eldest was born we've been tossing all our silver coins in a jar for them. When our 2nd child came along we decided to match the amount in the jar out of our pocket rather than split the jar proceeds between the two. Apart from one withdrawal of around $900 to pay a one-off, "entry" contribution when our son started private school we have not touched the accounts which now have a combined total of about $1800. Now I know that's not a huge amount but it doesn't seem like good sense to have it sitting in the bank earning about 1% pa (although being juniors at least there are no account keeping fees). What I'd really like to do is get this money working for a better return, possibly in something that we can continue to add to in say $500 lots. We aren't 100% sure when or even how we'll turn this money over to the kids (maybe a house deposit one day or to pay uni fees etc) but as our eldest is only turning 5 next month we have at least 13 years or more to continue building this nest egg. Does anyone have any suggestions?

Flatout
 
Hi Flatout,

what I did with my kids when they were born was open a managed fund account per child, which we have been contributing towards as their savings grow (through presents, money boxes, Family payments, etc.). We setup these accounts in the wife's name in trust for each child (as the account holder had to be over 18yrs old) as she is on a lower tax bracket. We opted for the Colonial First State Imputation Fund (which we have had 6yrs for the daughter & 5 yrs for the son) & has performed very well, re-investing any distributions (averaged close 20% p.a. since we got into them & have also provided some nice imputation credits). We have since invested in the Navra Fund for both, but this time purchased under our Family Trust (keeping record of it in the trust's minutes).

Considering the amount you want to initially invest, a managed fund would be worth considering (compared to just buying a single blue-chip stock from the ASX), which gives you some diversification... You may want to set it up under the name of the person on the lowest tax bracket or under a trust (if you had one)...

Cheers,

Manny.
 
Hi,

I have invested in physical gold for my kids. Currenly only my son has gold in the form of Perth Mint Gold certificate, and another lump sum is waiting for the newborn (July 06).

I'm also considering SFI's (self funded investments) from Maquarie bank.

Thx
V
 
hubby and his ex bought asg fund for their kid when they were young - biggest waste of money i've ever seen, even if they are now getting the monies back at uni.

with our just-turned 3 yr old i have saved all the child benefit payments and maternity payments in an account in her name. she now has nearly $9000 in the bank and hopefully by the time she is five there will be enough for a small deposit on a unit or townhouse (with maybe a little boost from mum and dad) to be held in trust for her until she is 21 ... then she can either live in it, rent it out, sell and pay hecs and travel overseas - or a combination of the above.
 
Hi

We bought the kids some NAB shares and taught them about the sharemarket. I cannot tell you how often I came home fom work to be told by early teen children that they ahd made money today because the shares rose in value.

Once the kids turned 18 we split the parcel and gave them their share of the shares for them to use towards a property of their own or whatever else they wanted to use the funds for.

Dale
 
Dale,

I was informed that for kids under the age of 18yrs cannot hold shares in their name.

I would appreciate it if you could advise us how you managed to get your kids NAB Shares.

Is this shares in your name

Thanks in advance

Daya
 
Hi

Simon is right. The share statements will look like:

Dale Gatherum-Goss
<Children's Account>

or something like this but you might be wise to use your own name unless you are adopting me.:D :D :D

Have fun

Dale
 
I purchased in Trust a 6 pack of 6 x 2 bedroom units and renovated 3 of them and then sold them off and kept 3 one for each child.

Being in a good location in Brissie worked on the basis they could live in the unit, rent it or sell and do whatever they wanted to with the proceeds.

At least at 18 they would have a roof over their heads without a debt.
 
We always took the view that any money we had went to reduce the mortgage and pay the IP loans. We have always needed all the funds coming in to service our big loans.

I have this thing that I wanted to have one IP for each child by the time they started at private high schools. We have done that but we are negatively geared so we are not actually making money from the IPs. But it is just a "thing" in my head, so I am happy, because I know by the time they go on to uni or whatever, they could be neutral or positive as the rents rise and loans stay the same.

We plan to pay HECS fees up front (providing our kids actually do study and not just fluff about at uni).

I don't want to just "give" them a house because it doesn't seem right (for me, anyway). We will probably help them into their first house in some manner, but it is a way off so that is an evolving plan.

If we had lots of money, we probably would have investigated some sort of schooling fund, but we have used our money differently, not wasted it, which is more of a problem.

Wylie.
 
manny said:
... We have since invested in the Navra Fund for both, but this time purchased under our Family Trust (keeping record of it in the trust's minutes)...
Click to expand...

Hi manny

For my knowledge, why is there a need to keep record of this in the trust's minutes? Is that just a personal decision?

With a discretionary trust, I thought it's not necessary to predetermine where income will go. That is, one of the advantages of a trust is flexible distribution of income and capital depending on circumstances.

Thanks
T
 
Hi Theo,

we just record the amount of money we have invested on behalf of each child in the minutes - that is more for our records (although I do also like to know which shares/funds I purchased on their behalf for my own personal records - to make it easier for me in the future to know which shares/funds were purchased/invested for the kids)...

In terms fo determining where the income goes, you as the trustee decide that, so if hypothetically the income received from these investments for the kids is more than their "tax free" amount, you can distribute the remainder of the income to any other beneficiary...

I hope this helps...

Cheers,

Manny.
 
flatout said:
Hi All,

This may not be the most appropriate place to ask but there seem to be some well informed folks here so here goes...

We have two small children. Since our eldest was born we've been tossing all our silver coins in a jar for them. When our 2nd child came along we decided to match the amount in the jar out of our pocket rather than split the jar proceeds between the two. Apart from one withdrawal of around $900 to pay a one-off, "entry" contribution when our son started private school we have not touched the accounts which now have a combined total of about $1800. Now I know that's not a huge amount but it doesn't seem like good sense to have it sitting in the bank earning about 1% pa (although being juniors at least there are no account keeping fees). What I'd really like to do is get this money working for a better return, possibly in something that we can continue to add to in say $500 lots. We aren't 100% sure when or even how we'll turn this money over to the kids (maybe a house deposit one day or to pay uni fees etc) but as our eldest is only turning 5 next month we have at least 13 years or more to continue building this nest egg. Does anyone have any suggestions?

Flatout
Click to expand...
It might be worth checking the Children Education Plan from CBA and Life Plan. They seem very tax effective.

Also check out Bank West Children Savings account 10% (not a typo) for up to 3,500 provide some conditions are met.

Regards

Tim
 
Hi Tim,

that's also a strategy, but in my case, I tend to like having that little extra control, ie. 5 years down the track I may decide to sell off a couple of parcels of shares &/or managed funds I had bought for them & purchase them an IP, etc... I tend to like that flexibility & opted this way...

I think it is best doing something for the kids, rather than having their coins &/or savings sitting in a plain old term deposit or just a money box...

Cheers,

Manny.
 
No kids yet, but we've started planning. We have a ING Direct Saver account, about 5.8%, $50 a fortnight goes into this. When we get the baby bonus we'll take out what we have and put it in a fund then start again with the ING account, when it builds up, add to the fund etc.

BR
 
manny said:
Hi Theo,

we just record the amount of money we have invested on behalf of each child in the minutes - that is more for our records (although I do also like to know which shares/funds I purchased on their behalf for my own personal records - to make it easier for me in the future to know which shares/funds were purchased/invested for the kids)...

In terms fo determining where the income goes, you as the trustee decide that, so if hypothetically the income received from these investments for the kids is more than their "tax free" amount, you can distribute the remainder of the income to any other beneficiary...

I hope this helps...

Cheers,

Manny.
Click to expand...

Thanks for your reply Manny. I can see that it would be useful to do that for internal tracking.

Regards
Theo
 
Hi, all,
No kids yet, but probably will in a few more years.

What is the advantage of having investments in the kids' names? I can understand how putting a few shares in their names will teach them about the markets, etc. but is there any other reason (tax, etc) for doing so?

e.g. why not just keep everything controlled by the parents (through trusts or whatever)? I wonder if 'knowing' there are assets waiting for them might increase the kids' expectation of 'entitlement'.
Alex
 
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