One time payment of 15 000 CHF in ETF by birth leads to 1.2 Million when retired

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Just read this article:
https://finanzfabio.ch/mit-etfs-die-ahv-retten

I dont want to talk about the political and AHV stuff. My wife is pregnant and I thought it would be a good idea to do this for my child.

Invest 15 000 CHF in an ETF via Interactive Broker and let it rest for 25 years. And after 25 years give it to my child which is hopefully able to let it rest furthermore. Even if not, after 25 years there should be a significant sum for whatever he needs in this age.

Which ETF oder Indexfunds works best for this idea?
I only invest in VT with reinvest dividends on. The problem is that after a time the Cash pile gets bigger because of a 200 USD dividend only 160 USD get reinvested (if VT price is 80 USD) and the rest stays Cash. I dont want a complicated calculation and the hassle for the baby ETF. So I am looking for an accumulation Indexfunds / ETF on Interactive Broker, low cost and similar to VT.

Do you guys know any good ones you use?

Thanks in advance.

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If you reinvest manually, there will not be more than the equivalent of 0.99 share in cash at any time

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Does automatic dividend reinvesting not make use of fractional shares? I thought IB activated this feature for everyone and VT offers fractional shares but I don’t personally own VT so maybe someone can tell.

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Sounds nice as an experiment, but if I were you I would just add some USD to round up to next full VT share :rofl:

Of course, accumulating Irish ETFs are also an option:

and Respective emerging markets if you want.

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Do I misunderstand accumulating ETF or did the guy make a mistake in his calculation?

As I understand an accumulating ETF re-invests the dividend automatically. In his calculation he didn’t do that, did he? He simply used the compound interest which is 15’000*1.07^65 (= 1.2 Million). Re-investing the interest would yield a much higher return.

I use VT for my son on IB. I simply buy about 3 shares more a month than I would for myself and transfer it to him (see @thepoorswiss blog post).

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7% average return (1.07) is used as an example where dividends are reinvested.

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