3 Different Ways to Grow Your Child’s Money with Investments
Children frequently receive cash gifts, ranging from birthday cash to various other pampering. While some parents believe their children should be able to spend the money any way they choose, they could also assist them in setting aside a portion, if not all, of the monetary presents for their child's future.
After all, 75 per cent of Asian Pacific parents say they save consistently for their children's future earnings. Why not walk the extra mile to help your child in the long run?
Why should you save and invest?
By investing your child's monetary gifts, you're also generating a nest fund to claim when they reach adulthood, giving them a leg up on the competition. This savings account can provide them with additional financial security. It can even be used to pay for future needs such as a home, education, or even a portion of a business's capital.
This is also an excellent method to teach your youngster about the importance of deferring gratification to reap long-term rewards. Allow your child to observe the banking procedure and show them how much their money has grown in their accounts every month to encourage them to save.
Here are some ideas for investing or saving your child's monetary gifts if you want to get started.
1) Savings account for children
A primary way for parents to build their child's money for the future is through a child savings account. These accounts can be opened in your child's name and allow their money to grow over time, often with no minimum age necessary to open an account and no fall below charge. When your child reaches the age of majority, they can apply for a bank card to withdraw cash or make payments.
Some child savings accounts even have special features for children. If the children deposit money into their account, they can earn points that can be used to redeem coupons and movie tickets, and these benefits can entice them to start saving more.
2) Accounts for Cash Management
Cash management accounts or portfolios, which were only introduced in the last two years, are better than savings accounts since they provide better interest rates, though they come with some risk. These accounts allow you to build your child's money through low-risk automatic investing.
Unlike savings accounts, most cash management accounts have an age requirement of 18, so you'll have to open one in your name first, and then transfer the funds to your child when they're older.
The advantage is that because banks do not handle these accounts, they do not offer tap-to-pay, which means your youngster will be even more hesitant to spend this money as soon as they have it.
As a result, cash management accounts are best employed as a long-term investment rather than being used for daily costs. Why not deposit any spare cash into these accounts, together with your child's cash gifts, for better long-term anticipated returns?
3) Investing in your child's future
You might also invest their financial presents in your name first, allowing them to increase their money over time. The Select Bond Fund, the Asia Real Estate Multi-Asset Income Fund, and the Global Growth Equity Fund are examples of such investments.
Your child's cash presents can also be utilized to help them fund their investment ventures.
It's critical to begin teaching your child about investments while they're still young, including offering them the option to make their investments when they're ready.
Consider investing your child's monetary gifts into low-risk assets on their behalf and assisting them in routinely monitoring their performance with child-friendly investment programmes to foster their interest in investments.
Begin at a young age
We want our children to be as financially comfortable as possible when they reach maturity as parents. As a result, it's critical to begin investing in your child's future while still young. You can build up sizable savings account for your child's future needs with a longer investing horizon.
There is no better moment than now. Your child will be well-prepared for adulthood with your guidance and sound financial practices.