The best time to invest for your children is when you're planning for them! Long-term investments can help set your kids up for financial success, making their lives easier in the future. You have the advantage of the power of time and compounding, according to Ben Nash.
Ben says you have two choices, either growth investments or defensive investments.
Growth Investments
- Australian shares
- International shares
- Property
Share-type investments, such as exchange-traded funds and managed funds, have a much higher return rate if you have the luxury of time. Micro investing apps are a great place to start, and setting up for regular investing is a smart move toward securing the best long-term investment for a child in Australia.
Defensive Investments
- Cash
- Term deposits
Defensive investments, such as a high-interest savings account or term deposits, are more stable and less likely to go backwards. However, the long-term return is significantly lower compared to growth investments like shares.
Investment Bonds and Tax Implications
Another option to consider is an investment bond or insurance bonds, which are popular because they have certain tax benefits. These bonds help parents invest for their children’s future while managing capital gains tax. However, it’s essential to understand the tax implications, including your marginal tax rate, based on your own personal circumstances and consider seeking professional advice before proceeding.
Opening Bank Accounts for Kids
Opening a bank account or savings account for your child is a straightforward way to begin their financial journey. While this is not the highest-earning option, it's a secure method for teaching children about money management and gradually growing funds over time.
Consulting Professional Advice for Long-Term Investments
Investing for your child’s future can be complex, especially when considering investment income, tax, and long-term strategies. Whether you're considering actively managed funds, investment options like investment bonds, or just looking for the best long-term investment for child in Australia, seeking professional advice is essential to ensure you're making the right decisions to secure financial future for your child.
