Having kids is a financially straining expense with the outgoing cash flow for raising kids increases with their age. During key milestones period between the age of 17 to 21, the expenses such as birthday parties, buying a car, university starts increasing exponentially. That is the shinning age where our children generally go to colleague or university to pursue their dreams. The answer to the golden question, is to start a financial investment from the day they were born. Simply because there is likelihood of spare cash at their earlier childhood compared to later teenage stage.
I met a lady on a bus back in 2014 and started a conversation about kids. She had a 14 year old teenager while I have a 2 year old daughter at that time. She says she regretted not saving early for her daughter’s ambitions of going to MIT in Bostan to pursue Information Technology. She explain that she took the plunge and invested USD$5000.00 into Facebook shares at £19.00 each in 2012. One simple reason: she believes Facebook will still be there when she becomes a grandmother. That was the advise given by her own teenage daughter. At that share price she has virtually multiplied her earnings by 8 times ($5000×8=$40,000). In my personal opinion, she was very lucky to take such a huge risk. She could have started sooner.
Back in 2015, I met a colleague at work and he was sharing about his son going to University at 17 years old. I ask if this was going to be an impact to his financial outgoings? He replied No. He later explained that he started saving for his first born since he was two. Setting aside money on a regular basis on fixed deposit and some for side steady investment in property rental. Rather than buying a second car, bikes, new musical equipment and unlimited amount of toys & video games; he had a discipline savings regime and ensure his outgoings did not increase as his career progressed. Ultimately he had grown the savings for his son when he celebrated his 15th birthday. I was impressed with the maturity he had when he was in his late twenties and now reaping his fruits in his early forties. This is classed as a successful financial freedom execution.
Taking the lessons learned and shared by people around me, I have taken small steps planning for financial investment for my own children. Starting a investment for a children’s portfolio is very easy and comes with variety of benefits:-
Assuming that you started a regular payment of £150.00 a month from the day your child is born until their 18th birthday, a total amount of £32,400 would be saved. Depending on the growth % factor of the investment the growth can vary from £57,500 to £115,000 on a 3% to 10% growth rate. Please not that a 3% dividend reinvestment have been taken into account too.
Final thoughts: £150,00 a month is equivalent to 15 packs of cigarettes, 7 take away sessions or 5 games of poker buy-ins. Always start early for kids investment fund and make a habit to save. Trying to scramble for cash when your child is 15 is slightly too late and risky to invest then.
Check out for later issues to discuss about types of funds, investment and shares recommended for investment.
For more info on how to start an investment account (beginners starters guide) please visit this link for more details.
For a starters index guide and recommendation visit this link.