(Investing for children)
Children’s investment strategies are based on similar principles to those for older investors. There are some subtleties in the elements of strategic planning. Clients occasionally ask us about investing for children’s futures. It is not possible to provide a ‘one size fits all’ response to this question. Individual family situations vary from client to client; and determining a financial future for a child without knowing and understanding their level of understanding of matters financial, let alone matters of ‘life’ can be quite a challenge.
The biggest challenge for financial planners in this arena, is that we are required to focus on providing strategic advice. Contrary to that position, most enquirers in this regard are seeking product advice. Suffice it to say that in most cases we ‘know the product’ – but that is only one limb of our regulatory obligation. In any way limiting of scope for advice, the resultant outcomes may not be forthcoming.
Circumstances under which investing for children (by relatives/ adults on their behalf) might arise, include –
- Cash gifts from relatives or friends: often a once-off (or annual) event;
- Savings plans with either simple or strategic goals. For instance –
- Simple: may include saving to have a ‘good start’ in life at some designated age or event;
- Strategic: may include saving to ‘fund higher education’).
Children’s investment strategies: implemented with traditional investment products
We often recommend using products, including –
- Direct shares parcel/ portfolio (or perhaps a Listed Investment Company – LIC)
- Managed investment funds portfolio
- Savings accounts
- Insurance bonds
- Scholarship accounts
Issues that need to be considered in selecting the appropriate investment product, include – accessibility; taxation; security; liquidity; and suitability. There are a number of articles on our website that deal with some of these matters: go to our website Library page and type a subject name (see bold words above) in the Search bar to read what we have had to say about the matter.
To arrange a meeting with one of our experienced advisers –
- Call our team – on 07 3421 3456 – or
- at your convenience, use or Book A Meeting facility to make your appointment at any time.
[This article was published in March 2010. We have occasionally refreshed/ updated, most recently, in October 2024.]
