Best long term option to invest 20k for child?

[sabre_ac]

I am seriously considering parking a modest sum in an ASX-listed index fund. As Warren Buffet said, share traders (as a whole) can't beat the market because they ARE the market. A ~9% p.a. return on investment with sweet f*** all fees doesn't sound bad.

The growing trend towards index funds certainly has some merit and data to back it up, the issue for Australians is they can be limited by the ASX which lacks diversity as a market, if you have access (through reputable providers) to US index funds, in my opinion, that is the better place to put your money.

 

[Rotayjay]

The growing trend towards index funds certainly has some merit and data to back it up, the issue for Australians is they can be limited by the ASX which lacks diversity as a market, if you have access (through reputable providers) to US index funds, in my opinion, that is the better place to put your money.

Indeed I might have to see a financial planner about investing in the US market in regards to tax etc. The US share market isn't so reliant on banking and mining, and grows quicker.

 

[The Edukator]

9% isn't too bad but imagine how much more your son would have if you leveraged into an investment property and got returns on a few hundred thousand? 20 years from now it's probably worth triple at the bare minimum. You can sell it, give or share rent or withdraw equity. s**t if you did the latter and got a second one in 5-10 years you'd probably do better again!

9% over 20y = something like 112k

5% on 350k property over 20y = 928k

 

[kwikfix]

Indeed I might have to see a financial planner about investing in the US market in regards to tax etc. The US share market isn't so reliant on banking and mining, and grows quicker.

No financial planner required asx:vts

 

[BILC]

Old thread, but full of information.

I have a son who is coming up to 12 months, unfortunately I have separated from my partner, and she has taken him interstate (She was supposed to bring him back), and now she is being super difficult with everything.

I realize that no matter what happens, I have to start putting money away that can help me spend time with my son in the future, but also to have a nice sum for him to study or invest when he is 21. 18 is too young for my liking.



I saw this chart and it made for some interesting reading. I am aware on the past performance does not indicate future performance, and you could be fooled into thinking that the cash rate will be good for you in the next 20 years, as it was heavily influenced in the late 80s.

I really like the Australian bonds option as it has the least amount of variability, and yeah sure you would get less return long run, but it seems a safer option. Wondering if anyone has used Vanguard, and what they are like.

At the moment, I am putting away $50 per week, and considering upping that rate by cpi every year. This money is to be for travel to see my son, holidays, doing stuff together, building stuff together and a modest sum for his future. I want him to appreciate money and would like him to be able to become involved in his teens with the investing, and working hard to increase this sum. I'm thinking that $50 a week should be able to do what I need to do while continuing to grow the investment long term.

Any thoughts?

I've got a little invested in vanguard funds. Not a huge amount and it's all just been done through a CommSec trading account.

I'd suggest trying to keep the trade amounts fairly large ($5000) to offset the cost of the trade.

If you're planning on keeping it there for a while it's a great idea, even during a market crash like 08' if you just held them you'd be fine in the long run. Through CommSec you can also get some ETF's which give you some exposure to international markets (VGS) which can further diversify your portfolio.

At the moment I've got mine split 50/50 between VAS (Australian shares) and VGS (International shares). Bonds have been popular in the past also but aren't a great idea at the moment with the interest rate so low.