Best Way to Invest Money for My Baby

Morphio25 on 17/05/2023 - 19:58

Hi OzB,

My baby girl turns 1 this Saturday.

When she was born people gave us money but since we mostly had everything we needed for her I put it into a bank account for her with GSB where it is currently earning 5.1% p.a.

I have been contributing $30 per fortnight and I also contribute the money we get from cans and bottles every few months when I go up there. I am planning to increase this to $40 per fortnight from now and a calculator tells me that if the interest rate remains the same as it is now I'd have just over $30K for her when she turns 18.

I can't help but wonder whether there are more fruitful investment options for the money, or should I just leave it in the account?

Cheers

Financial

Comments

  • MS Paint on 17/05/2023 - 20:02
    +5

    If you have a mortgage then put the money towards that. The baby can start earning their own money when they turn 15.

    • RockyRaccoon on 17/05/2023 - 21:04

      The OP should consider this, and then just keep a tab of the money that is "saved" and credit that to the child in this "Bank of Morphio".

      There are possible tax implications with child savings accounts for a parent, that they would be best reading this from the ATO, and getting advice on by those qualified.

      Off setting would avoid this, and should give the child more interest.

      https://www.ato.gov.au/misc/downloads/pdf/qc16211.pdf

  • 7ekn00 on 17/05/2023 - 20:16
    +1

    Gold diapers, Gold spoon, Gold grills, Gold to the moon

  • 87percent on 17/05/2023 - 20:20

    This has been asked so many times

  • Malik Nasser on 17/05/2023 - 20:22
    +2

    Over such a large time period, I would go with shares.
    An average return of 8%-10% per year is a general expectation over the longer term.
    Go with an ETF that tracks an index.
    The US market has performed fantastic over the last 10 years. Take for example Vanguard US Total Market Shares Index ETF (VTS). Its 10 year performance to the end of 2022 was 16% per year (compounded annual growth rate). Going forward, I would not expect such large returns, as this had tailwinds from falling interest rates, and also strengthening US dollar.
    https://www.marketindex.com.au/asx/vts
    As a comparison Vanguard Australian Shares Index ETF (VAS) had 10 year performance to the end of 2022 of 8% per year.
    https://www.marketindex.com.au/asx/vas
    Note that shares generally don't go up in a straight line. Some years you may get 20%-30% returns, and other years get a negative return of -10%. It is more volatile, but better returns in the long run in comparison to savings accounts / term deposits (cash).

    • Guerilla89 on 17/05/2023 - 22:28

      Honestly I would second this. Here's a link: https://www.vanguard.com.au/personal/invest-with-us/account-…

      I would just put it into ~75% Australian shares through a managed fund with the lowest fees (currently I believe this is VAS) and the other ~25% through the international market (which is mostly US shares). That way it won't be hit too harshly by any shifts in currency rates and you're also supporting Aussie business while not putting all your eggs into the Australia basket.

      Keep in mind shares are a long term investment.

  • Mechz on 17/05/2023 - 20:24

    $30k in 17 years time is going to be like $10k in today's money, probably less.

    Honestly, you'd be better off just getting $5k of blue chip shares and $5k of BTC now, and letting it ride.

    • OMGJL on 17/05/2023 - 23:22

      say CPI goes +3% on average in the next 18 years, her $30k will worth around $17k of today's money.

  • Kongzi on 17/05/2023 - 20:56
    +3

    Just pocket it

  • KaTst3R on 17/05/2023 - 21:05

    The most sensible thing to do is index fund or ETF.

  • elgrande on 17/05/2023 - 22:07
    +2

    1? Thats already too late for any meaningful investments. Best to focus on investments for the future grandkids.

  • screensaver on 17/05/2023 - 23:54

    Try to get an investment with capital gain as well as monthly dividend, there is one that I have been in Australian Unity Diversified Property Fund. They own shopping centres with Coles and Woolworths as tenants, and are expanding 2 shopping centres with new tenants. I have done very well in 3 years, but for the longer term it should be very good as all those new rents come in

  • dcep on 18/05/2023 - 02:21

    BTC in cold wallet

    runs

  • Choc0 on 18/05/2023 - 09:46

    Look up DSSP for avoiding punitive ATO rates for kids

  • cupcake on 18/05/2023 - 15:12

    I would like to know also, please.

  • Bandook on 18/05/2023 - 20:44
    +1

    Vanguard has offering for kids account.
    Check it out here
    https://www.vanguard.com.au/personal/invest-with-us/account-…

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