How soon should you start investing for your kids? When should you start teaching your children the concept of investing? If you’ve been wondering if you should start now or wait a bit longer, stick around to gain some insights on this topic.
In this episode of Dadpreneurs Rising, Carl Taylor tackles the dilemma of whether or not parents should invest money for their children’s futures. He shares that he sets aside a monthly amount that gets invested into ETFs and shares for his daughter. Her portfolio is kept separate, so the funds are earmarked for her.
Carl believes it’s important to give kids a financial foundation, even through small, regular contributions. There is danger in simply handing money over to your kids without inculcating a mindset on how they should handle their funds. So his plan is to start teaching his daughter to invest the money alongside him to help her develop financial skills and perspective before she’s allowed access to the capital as a young adult.
The key is to not simply build assets but impart money-related knowledge and provide your children with an investing portfolio to learn with.
IN THIS EPISODE, YOU’LL DISCOVER…
- Ideas on how to invest on behalf of your children via ETFs and shares (00:47)
- When should you give your children control over their investments? (01:48)
- The benefits of giving your children their own bucket of money (03:24)
- The Jar System (04:00)
QUOTES
- “If you just give your kids money, but you don’t teach them how to handle money, you don’t teach them how to look after money, you don’t teach them how to think about money, then you give them a pot of gold that they can go and just spend.” – Carl Taylor
- “Give a mindset, a skill set, an understanding of where money fits in society.” – Carl Taylor
RESOURCES
WHERE YOU CAN FIND CARL TAYLOR
Automation Agency
CarlTaylor.com.au
LinkedIn
Facebook
Twitter
TRANSCRIPTION
Hey, and welcome to another episode of Dadpreneurs Rising. I’m your host, Carl Taylor.
This is the show for you if you are a dad, who runs your own business, and you’re looking to better balance business, home life, being a father, being a husband, all of the shebang that come with being a dadpreneur.
Now, in today’s episode, we’re going to talk about an interesting topic, which is, should I be investing for my kids? You know, it’s an interesting dilemma that many parents, but as dads who are, you know, success- oriented, usually, if we’re running our own business, we’re very goal-oriented, and we’re success oriented, and we like the idea of building investments for ourselves, should we be investing on behalf of our children too, as well? And I think this is a very personal decision, however, I will share some of my takes on what I do.
So I invest a amount every single month for my daughter, that amount gets dollar cost averaged into a bunch of ETFs and shares. And the way you structure that there are so many different ways to structure that. You can structure that where you put it in your child’s name, and there can be tax implications to that, you can put it within a structure.
For us, I have it inside of a company that also does other investments for the family, but it has its own separate portfolio. So it’s very clear that this is my daughter’s share portfolio, this is her investments, just happens to be owned within a company entity that we use for investing. So I believe it’s important to start them off if you can afford it, even if it’s small amounts to give them a foundation. But the interesting thing that always comes up is if you’ve been building wealth, at what point do you give them control? So while I’m not at that point, yet, I can share a little bit of what I’ve been thinking and the current plan.
So the current plan is that around 16 years old, if she’s showing interest, I will give her an opportunity to start investing the money alongside me. So she won’t be able to cash it out, she won’t be able to do anything with that money, except to use it to make more money. And this is really a key part of you know, if you just give your kids money, but you don’t teach them how to handle money, you don’t teach them how to look after money, you don’t teach them how to think about money, then you really, you give them a pot of gold that they can go and just spend. My hope is to give a mindset, a skill set, an understanding of where money fits in society, rather than just a bunch of money.
So around the 16 year old range, maybe early if she shows serious interest, but probably around that point, we’ll start to go, Hey, we’re going to invest this money together, we’re going to make some decisions, walk through it, and really help kind of guide her while also letting her make decisions and see what happens. Around the 18 year old mark is when I’ll probably start to go okay, well, now, you can get a small dividend or something, taking it, you can’t access the capital, but you can start to live off the eggs if you choose to, you can start to take them out rather than reinvest them.
Hopefully between 16 and 18, I’ve taught her the value of reinvesting those dividends, so she won’t want to but I’ll give that to her as a choice. And then probably, a lot, a bit later in life around the 25 year old, maybe even 30 year old mark, depends on whether I’m still here, is when I would actually go okay, now you can do whatever you want with that capital. So that’s currently my plan. So in terms of should you invest for your kids, I think you should.
Obviously, the more kids you have, the more challenging it becomes. I think it is worth giving them their own bucket of money, it doesn’t have to be huge amounts, but just small little investments that you can make on a regular basis. That gives them a portfolio, it gives them a place to get started. Because then you can have that conversation of like, look what I’ve created for you. Let’s keep the ball rolling before I actually give it to you. But as I said, this is a personal decision for you to make. And, but if you can afford it, even just small amounts, $5 a month, it can be all you need to get started.
Obviously, if you can put more then go for it. But if you’ve got a bunch of kids, you put $5 a month, I think that’s a really good thing to start with. Another area you can start with too is, you know, teaching them, we’ve talked about in previous episodes on the podcast, the Jar System, teaching them how to take the money that they do receive either from a job or if you pay them an allowance, and how to make that, you had a budget that money into different jars and allocate it for different purposes, that will also have a really powerful impact over and above just giving them a bunch of money that you’ve invested over the years.
So that’s where I’m at. I’m focusing on shares at some point, we might invest in a property for her as well. But that, you know, we’ll leave that down the sides for the future to see what happens. But right now we’re just keeping a pool of money in shares for her.
So I hope you found that interesting. I’d love to hear from you. If you’ve done something differently, shoot us an email. We’d love to hear from you. You can find us at rising dot show, you can make contact, and it would be great to hear your approach to this. Until next time, keep up the journey.
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