Finances: Avenues Of Investing For Your Children

Few words can adequately capture the joy that comes with the birth of a child in a family. There are tremendous changes in the lives of the members of the family as focus now shifts to the newest member. In some instances, the mother quits her job (semi)permanently to look after the kid. A nanny is hired to aid the lactating mother while the man of the house (if he is there) now works even harder to support his family. In a nutshell, the kid is treated as royalty. Parents always have the best interests of their kids at heart. What they are able to do to give the child(ren) a head start in life, they will do. A while ago, we discussed ways we can teach children about business just to arm them with financial literacy and today, we will look at avenues you can use to invest for your children. These are ways to create a nest egg for the kids to cushion them from future financial struggles. It will also help you to enjoy your retirement benefits without having to take out chunks of money to take care of them. As you make those plans, it is also prudent to consider factors such as the risk, taxes, liquidity as well as return on investment. Here we go:

Investing for children. Image from http://www.scottishfriendly.co.uk/blog/2015/05/investing-for-children-with-scottish-friendly/
Investing for children. Image from http://www.scottishfriendly.co.uk/blog/2015/05/investing-for-children-with-scottish-friendly/

Purchase property that appreciates over time

Taking the first step of deciding to invest for your kids is proof that you are thinking long-term. Your plan then needs to be in such a way that whatever property you decide to purchase, will either appreciate in value or in a great way, secure your children’s futures. A sound investment is one which can either be monetized or easily passed over to the child. Here, you could think in the lines of land in a fast developing area or property such as a house. Early investment for a child means that they have little or no knowledge about money and therefore you need to have the property registered under your name until the point where they can make sound financial decisions. Prior to purchasing any property, consider these factors.

Open a savings account

There is no such thing as an appropriate time to start saving for your kids. Saving, as an avenue of investing for your kids, entails the simple way of putting money in a savings account and teaching kids to follow in these steps. Children naturally imitate their parents. By getting a piggy bank for the kids and monitoring how they spend the coins you give them, you will have impacted on them positively. Get bank statements and explain to them simple facts on saving, show them how to keep records and in future, they will not squander what you will have helped them save.

Invest in their skills

Giving your children an education is good, probably the best gift, but helping them build their talents and skills is even better. This is where you enroll them in ‘unconventional’ classes such as music school, football academies, dancing classes, writing courses, art school among others. These schools or extra-curricular activities might cost you a lot of money in the short term but once the kids acquire the skills, they will be able to create lucrative careers out them if that is their passion. We all know the success stories of Victor Wanyama, Eric Wainaina and Lupita Ny’ong’o who have conquered the world just because they were given a chance to hone their skills when they were young.

Education insurance

Soaring tuition fees may frustrate you if you don’t have an appropriate plan. You want your kids to get the best education right from the time they enroll in a kindergarten to the time they graduate from a tertiary institution. How well then can you give them this gift without going broke or taking a huge chunk off your retirement monies? Consider taking education insurance. Some of these education insurance options can guide you in deciding what is appropriate for you. Insurance will also cushion your children from taking education loans which they will struggle to pay in future.

Other avenues

Having diversified portfolios in bonds, shares, properties among others is a great way of making money that you can then invest for your kids. If you would like your kids to benefit from this investment, then you may have to consider long-term portfolio that has a low/medium risk. If it goes well, you may reap huge benefits but in the event that it goes wrong, then you may experience losses.

Teaching your children about the importance of saving and investing is a great way to ensure that when they are adults, your children will be able to make sound financial decisions. Also it has the added benefit that you will not be struggling in your old age to support your grown up children.

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