1000%
If I’d gotten a substantial chunk of money at 18 I’d have pissed it away (while having a great time doing it, for sure), so the middle way you suggest with giving the cash and the investment sounds like a great idea. That way they can use the cash to let off some steam and leave the investment compounding away.
Hi everyone,
I’m a dad of three kids (ages 10, 11, and 12) living in Geneva, Switzerland (we’re Swiss nationals) and I’m looking for some advice on setting up investments for their future.
Currently, I invest monthly in 2 ETFs through DEGIRO for my own portfolio, but I want to start putting aside additional money each month specifically for my children - something they can benefit from when they’re older (thinking college, first home, or just a financial head start in life).
My main question is about account structure - I’m torn between a few approaches:
Please use search before opening a new topic.
Discussions already exist:
https://forum.mustachianpost.com/t/how-to-invest-for-children/
If you open separate accounts in your name but you consider them, in practice, for your children - then obviously it has no concrete difference w.r.t. just investing everything together, and it is just a trick for a simpler accounting, which would be helpful only if you think you need this very concrete accounting in order to be able to easier track what is the portion of your portfolio you mentally allocated to your kids.
If you open accounts in their name instead and then fund it (effectively gifting them money) then it has concrete implications (not on taxes, at least not before they turn 18 I think) but they are mostly negative IMO: you will have a harder time finding an institution that accepts accounts for minors, harder time accessing the money if needed and you can’t prevent your kids from accessing the money when they turn 18. The only advantage of this approach is that is gives somewhat protection from the children parents/guardians squander children’s money: so this would make sense if you want to protect them against your future self (basically make an irreversible gift now) or if other people (e.g. relatives) want to fund the children’s portfolio and want to be somewhat confident that the money will end up in the children’s hands
Not a user[$] and not promoting it, but maybe have a look at this:
The Children’s Portfolio. Investing in their Future.
I mostly disagree with @rez ‘s post above on opening the account in the kids’ name. I’ve written about some of my thoughts on this in a different topic and I won’t repeat it here.
$ I am however a user of their vested benefits offering. Alongside VIAC.
IMO that thread is about a different topic: teaching kids to invest (as the title says), here instead OP was talking about the “real amounts” (buying a house, etc.). I am supportive of training kids with real money by giving them control, but the point of training is to let them decide on things and screw things up so that they learn, so the balance accordingly must be a “training” one that can be lost
Thank you so much for taking the time to write such a thoughtful and detailed response - this is exactly the kind of practical analysis I was hoping for!
Your breakdown of the different approaches really helped clarify my thinking. You’re absolutely right that separate accounts in my name would just be an “accounting trick,” but after reading your response, I’ve realized that this simple accounting actually has value for my situation - mainly for transparency with my wife and being able to clearly show the kids their progress over time.
Based on your advice (and the practical challenges you mentioned with accounts in children’s names), I’ve decided to stick with my current broker (DEGIRO) and add a 3rd ETF in my name that I’ll mentally allocate to the kids. This gives me the tracking clarity I want without any of the administrative headaches or loss of control you mentioned.
Really appreciate you sharing your knowledge - it saved me from potentially making this more complicated than it needs to be!