Please don't laugh

[seocourse]

I have noooo idea about the sharemarket...

but I want to buy my kids somethink like 1K to each (they are just 4 and 1 year old) in shares... for the future... so this means, leave them "there" for 15 plus years...

is that a smart idea?

does it make any financial sense?
or is just a romantic silly idea?

what type of shares should I buy then/
thanks guys

[one]

Hi Gabriel,

Investing for your children's future is definitely a great idea! Putting $1k each into shares is okay, but at that amount you'd really only be investing in a single company each, so from a diversification perspective it's not ideal. What I mean by that is if the one company you invest in goes bad, then you could lose the lot.

A better idea may be a managed fund, as your $1k will then be spread across a number of different investments, and will be managed by a professional fund manager. It is true that your costs will be higher with a managed fund, but the benefits should outweigh the costs.

There are a few other options, if you'd like to have a chat about it feel free to email shane@equita.com.au or call me on 0439 869 682.

Cheers

[ray_223]

Hi Gabriel,

I tend to be a little conservative, we just put the kids money into term deposits.
They are starting to grow nicely so we may consider something else in the future and managed funds has been on my mind.
Even if we don't go the managed fund option - starting early and keep putting little amounts in is working great.

Good luck,

[ray_223]

But ... the big stinker for me is ...

WE HAVE TO PAY TAX ON THE INTEREST THE KIDS MAKE!!!

how can we get around that??

[one]

Insurance investment bonds are good from a tax perspective if holding for the long term. These little gems are tax-fee (technically "tax-paid") once they've been held for ten years. That could be your answer Ray!

Drop me an email if you'd like any further info.

[urlelove]

Hi seocourse

That's definitely a smart idea, in fact it's super great idea..;)

[kellyy]

Hello,
Oh i am also new in that field and i also don't have enough information about this.by the way we have so many apps for iphone you can Browse the App Store for games and apps for business and also get some of your favorite quotes for your iphone, entertainment, and more.

thanks!!

[prawn_86]

Basre in mind that managed funds will eat a lot of any profits up in their comission (usually around 2%).

If you want to buy a share that basically tracks the Australian index look at STW, ARG or AFI.

This will give you a broad exposure to the market and the ASX

[Bachy_2]

But ... the big stinker for me is ...

WE HAVE TO PAY TAX ON THE INTEREST THE KIDS MAKE!!!

how can we get around that??

Can I just correct you on this. You do not have to pay tax on interest your kids make. There is several options with regards to that:

1: open the account under the kids names. So long as the kids income does not exceed relevant thresholds there will be no tax to pay. Without getting too far into details the kids can earn up to $2,999 of investment income (ie interest income for the 2010 financial year) without having to pay tax on it. Beware - income over $3,000 will be taxed very harshly. Please read through the link I have provided to see if it is applicable to your case.

2: you can also open the account 'as trustee for' your child and so attribute the interest income to them (same as above). However - if you withdraw money from the account the account will be considered to be for your personal use - you will pay tax on the income.

It is crucial to evidence that the money is not for you personally - That means you are not allowed to withdraw cash from it, you are not allowed to have access to it, it is not your money. The easiest way is to have a written agreement that the money is for your childs use exclusively at some later date - and remember - deposits = ok, withdrawals by you = not ok.

(www).ato.gov.au/individuals/content.asp?doc=/content/20046.htm

(sorry I cant post links yet so you will need to remove the brackets)

In any case if you are interested in saving for a minor you should consult with your accountant as tax law is a very complex area and you want to make sure you cross the t's and dot the I's. Without specifically reviewing your circumstances I can't guarantee that the above will apply to you.