How I’m investing for my child’s financial future
My husband and I welcomed our baby boy in May last year (2023). Here’s how I invest to set him up for generational wealth - or at least a financial head start!
Investing
Every week, I invest $60 for my 18-month-old by putting $20 into each of his accounts:
Kiwibank Notice Saver: A reliable PIE fund with a current interest rate of 4.60%. My husband and I used this to save for our wedding - you can continuously add to it, unlike a term deposit!
Pathfinder KiwiSaver Growth Fund: An ethical KiwiSaver fund with positive investments and an average annual return of 10.1%.
Sharesies Kids’ Account: Mainly in the Smart US 500 ETF, which tracks the S&P 500. According to Investopedia, the average annual return of the S&P 500 is 10.26%.
How much will he have in 25 years?
Kiwibank Notice Saver: $48,037
Pathfinder KiwiSaver Growth Fund: $108,891
Sharesies Kids’ Account: $111,630
That’s around $268,558 - from investing $78,000!
My life insurance
If I pass away, my family is covered for five years of my salary - two years of my salary covered by my personal life insurance and three years of my salary covered by my work life insurance. This way, I have peace of mind knowing that if the worst happens, my husband won’t have to worry about money, can keep paying the bills without any stress, and can grieve and otherwise take his time to decide what to do. For example, he could sell our 3 bedroom, 2.5 bathroom house - valued at $1,000,000 - and buy a 2 bedroom, 1 bathroom home for one adult & one child, or perhaps pay off a significant chunk of the mortgage.
My will
Before having a baby, making a will wasn’t something I considered a huge priority - but as soon as my baby was born, I wanted to make sure I got it sorted as soon as possible! I was very grateful that my life insurance company covered the cost - subsidising the $820 it cost for my husband and I to write our wills. My will stipulates that if I pass away, my share of our property goes to my son, along with any other children we have.
During this process, my husband and I had to change our ownership from joint tenancy to 50:50 tenants in common so that I was able to do this - or else 100% of my share would’ve automatically gone to my husband and 0% to our child.
And of course...
Teaching my child to be mindful with money
As my child grows older, I plan to teach him about money in ways I was taught as well as ways I wasn’t:
Creating a positive association with money e.g. empowering and inspiring, rather than frustrating or causing conflict
Cultivating a healthy growth mindset
Talking about money and involving him in money conversations e.g. bank appointments
Teaching financial literacy through books, games, and pocket money
Being open and transparent about money - not treating it as taboo!
How are you creating or planning to create generational wealth for your children? I’d love to hear your thoughts!
Sophia x
