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Starting an investing conversation with kids

Introducing children to the concept of investing and building long-term wealth helps lay the foundations early; with an ageing population and less taxpayers to fund government spending in future, younger Australians are likely to bear the brunt of a dwindling financial safety net.

Recent research found that young Australians are showing more interest in super and are looking to prioritise their financial health early on in life; with 54 per cent of Gen Z (born 1995-2009) checking their superannuation account balance at least once a month.

Here are some ideas:

  • Use technology as a learning tool - kids growing up today are digital natives with the use of tablets and apps as common learning tools. Imparting wisdom via already familiar technology could be a way to keep kids engaged. Micro investing can be an opportunity to teach kids two important lessons; using pocket money wisely, and how small invested increments can accumulate over time. There are also many other options available such as share trading accounts specifically designed for kids.

  • Explaining the concept of dividends, and how some investments can pay dividends in the form of cash, may spark some interest. This is also an opportunity to discuss the trade-off between cash dividends (i.e., spending now) vs delaying rewards until later (i.e., reinvesting dividends through the purchase of additional shares).

If you’re looking to open an account for your child, there are some restrictions to consider. For example, one must be aged 18 or older to buy and sell shares in Australia—therefore, some parents choose to open an account on their child’s behalf, under their child’s name. This means the investments are owned by the child, but they won’t be able to access the investments until they turn 18.

There are also tax implications if the earnings on the account exceed $416 per financial year. Additionally, once earnings reach this amount, you must lodge a tax return on their behalf.

If you would like to talk to us about investing for your kids, get in touch today.


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