Our Marketing Officer Carly Esterhuizen shares her thoughts on investing for your kids, how to set up a kids account, how her family thinks about choosing their investments.
This is what people kept saying to me in the last few months of pregnancy as I prepared to welcome my second child earthside. I now know exactly what they mean… Having a second child is exponentially more work. But the fun, love, giggles and gratitude also compounds.
It struck me though, as I was creating my son’s EasyEquities account on day 3 of his life, that those words “1 + 1 does not equal 2” are so true of how we set them up for the future too.
What we do for our children now, can literally change the opportunities, experiences and foundation of the rest of their lives. That’s insanely powerful.
1+ 1 can actually equal infinity.
Coincidentally my 3-year-old daughter’s Tax Free Savings Account just hit R100K. A real proud parenting moment for us. We should be celebrating those milestones just as much as first steps, first words and the first smile (my son just gave us that one this week – sorry, Moms are allowed to brag).
Almost everyone I have encountered in my parenting journey has either got an EasyEquities account for their kids or wants to set one up. I’m talking parents at school, my lactation specialist, my paediatrician, the lady who runs the Moms and Tots class I just signed up for. And I keep telling them how easy it is…
In order to have an account for your kid you need one yourself. So, register an account if you don’t have one already.
Log in to your account and go to the top right profile menu and select “Add an Account for my Kid”.
Select EasyEquities (You can add an EasyProperties account – as well as other accounts - once your EasyEquities account is set up. I’ll get into that in a bit.)
Fill in all of your kid’s details. They’ll need to have a birth certificate in order to register an account, and I suggest that once you are done filling out the form and creating an account for them, that you log a ticket with our support team and proactively send them a copy to speed things up.
You’ll need to reference your kid’s account number when you log the ticket, which you can find by logging into your kid’s new account; clicking the top profile icon and selecting the number that appears under “Easy ID”
Anytime you want to access your kids account you’ll need to log into their account with the credentials you created when you set their account up.
Their username will be on the Welcome email you received, but if you forget it you can reset it here.
You can reset their password here too.
Step one is to get some cash into their account.
Your kid’s account will come standard with a ZAR account (investing in South African stocks, Exchange Traded Funds etc); as well as a Tax Free Savings Account. And there are more you can add.
First fund your ZAR account using any of the methods outlined on the deposit page in My Funds section of your account. You’ll need your kid’s account number (mentioned above) as the deposit reference – make sure you copy it exactly so that the money gets allocated to the correct account.
Once the money has landed in your ZAR account (the time it takes will depend on which method you used and when you did the deposit) you can move it to any of the other accounts you have or want to activate: Tax Free Savings Account, EasyProperties, Retirement Annuity. Here is a list of what you can invest in with a child’s account – there are some restrictions.
Here’s the thing. There’s no right or wrong answer to this question and speaking from experience it’s quite hard to commit to one particular path. I’ve found the best approach has been to be flexible.
My husband contributes a monthly amount to each of our kids’ accounts. Its not massive, but it ensures we are being consistent, no matter what.
When I have extra cash, I do adhoc lump sums.
We both have our own investment portfolios that take priority, because one of the most important gifts we want to give to our children is to not be a financial burden on them when we are older and can no longer work.
We’re not the only ones who contribute to our kids’ accounts. For birthday parties, we always offer EasyEquities vouchers as a gift option. And our families contribute to their accounts every year at Christmas, sometimes birthdays too. It’s a really meaningful way people can give your child a gift that they won’t lose interest in, break or outgrow in a couple of months (if you’re lucky).
You can find vouchers when you click on the gift icon on your top right menu in your account.
Everyone is different, has different goals, time horizons, risk appetites and preferences. But I do think Tax Free Savings Accounts (TFSA) need a special mention here.
Investing your money in a TFSA means you won’t pay any tax on your investments when the time comes to sell them and withdraw the money. Think of how that impacts your kid’s takeout? All the profit they make is theirs. And if you invest in a TFSA early on in your kid’s life, they have so much time for those investments to grow into something meaningful.
I am a TFSA girlie, all the way. In both my personal portfolio and my kids’; it comes first.
There are also some really great options to invest in a TFSA. I particularly like Actively Managed Exchange Traded Funds (AMETFs). They are themed investments, made up of a bunch of different stocks, that are selected and managed by an expert. Because let’s face it, between school runs and nappy changes, there isn’t always time to spend on curating a portfolio yourself.
My husband and I are fans of the Core and Explore approach when it comes to investing for our kids. The majority of their portfolio is managed, mostly in Active and Non-Active ETFs in a TFSA. And then we have some single stock investments in their ZAR account, because we feel they have a long enough time horizon to take on the extra risk. We’ve also invested in some property through EasyProperties. Adding another asset class ensures that their portfolio is diversified.
Ultimately the choice is yours to make in terms of what you invest for your kids. I have some tips on What To Invest In that apply to anyone; kids and grown-ups.
When your kid turns 18, that account becomes theirs, legally.
Wouldn’t it be incredible, that if by then, they were fully engaged with investing already and could have a real interest in how it carries on? That picking stocks is something you chat about on car rides, suppers and at bedtime? That when you become a grandparent, they could be paying it forward to the next generation and you can watch your grandkids grow into mini Warren Buffetts too?
That could really happen. And if every parent did that, we’d be looking at a very different South Africa.
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