Not sure how to invest in your child’s future? Managed funds could be the answer.
Nappies, childcare, shoes, music lessons, sports fees – sometimes parenting feels like one expense after another.
And when you’re busy coping with the day-to-day demands of raising a child, it can be hard to think about your child’s financial future.
But before you know it, your children will be almost grown up. And that’s when the really hefty expenses kick in.
So how can you help your children prepare for the big-ticket expenses? Costs like:
- buying a car (or maybe an electric bike)
- taking a gap year
- getting an education, here or overseas
- taking their first step on the housing ladder
Is KiwiSaver the answer?
Many parents are preparing for their children’s future by setting them up with a KiwiSaver account.
By 31 March 2018, 8456 young people aged 17 or under were enrolled in KiwiSaver.
A KiwiSaver nest egg can be an good head start for young people fortunate enough to be able to use it to buy their first home.
But that won’t be everyone, thanks to our overheated housing market. Nearly half of young Kiwis believe they won’t own a home by the time they retire, according to Financial Services Council research.
And if your children aren’t able to use their KiwiSaver to buy a property, they generally won’t be able to withdraw the funds till they turn 65.
Now here’s the good news
If you’d like to help your children out before then, there are alternative ways to invest for their future.
One useful option is a managed fund.
With Kiwi Wealth’s Managed Funds, your money is pooled with other investors’ money and invested in a broad range of assets, from cash and shares to bonds and property.
The three big advantage of Kiwi Wealth’s Managed Funds is that they’re:
- Have the potential to generate higher returns than a savings account or term deposit.
And they won’t cost you a fortune.
Kiwi Wealth Managed Funds are among the most accessible actively-managed funds on the market.
You can open a Kiwi Wealth Managed Fund on behalf of your child for just $500, and add as little as $50 per additional investment.
Managed funds are a smart way to save for the goals you have for your children because you can make investments and withdraw money for their benefit whenever you want to.
So you can respond to your children’s financial needs as they grow up, whether they need help paying for their education or buying a car so they can commute to their first job.
Glen Macann, Kiwi Wealth’s Head of Advice, suggests starting when your children are still young. Following the progress of investments like a managed fund over time can help kids understand the value of investing over the long term.
“The best approach is to start early, save regularly and make it painless,” says Glen.
“For example, you could arrange for a regular direct debit to the investment account.”