Ben Nash is back, listening to your questions and answering them in the most succinct way, helping you grow your wealth and “live a life not limited by money”.
This week Ben answers our reader, Ashlee. She has asked about saving and investing for her children and being able to give them a nice lump sum when they’re 18.
What is the right amount?
There are two main tools to help you with saving and investing for your kids because there really is no 'right amount'.
Compound interest calculator.
Ben recommends the MoneySmart website run by the Australian Government. It has an easy-to-use compound calculator to look at your savings and investments and you can change up the amounts based on the time you have to save and invest for your kids.
- The expected investment return in line with the current long-term (30 year investment) is 9.8 per cent and you will be safe using this amount in that calculator.
- Don't forget to check the impact adding even 10 per cent can have.
Goal savings calculator
This one is handy for a specific goal. For example, if you want to hand over 20K to your child when they turn 18, you can pop in a few numbers. The target, the time you have, the expected return (again, that 9.8 per cent would be safe to use) and it will tell you what you have to save or invest in that timeframe. Change things up until you're comfortable.
Where to invest for your kids?
There are lots of ways to be right, but the key decision to make is researching if you want to invest actively or passively. Statistically passive investments outperform active investments about 95 per cent of the time.
Look for something that's easy to use and easy to automate. Micro-investing apps are a good place to start.
Thanks to Ashlee for sending in her question. Ben can answer your financial question too, just pop in a quick form for us to submit.
The Care for Kids team is so fortunate to be able to bring Ben's knowledge and understanding of family finance to the forefront of our Parenting Playbook and would love to help you too! If you've got a question you'd like Ben to answer, get in touch with the team and we will forward that question on.
Ben Nash. Financial Adviser and the founder of Pivot Wealth, helping people invest smarter so they can create a life not limited by money.
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Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.