Has anyone invested in Sharesies for little grandchildren.
I have some money that I would like to invest for my 2 small grandchildren so they could use it for Uni or perhaps towards a house etc.
Has anyone done this? Are you still happy with the decision?
Pros and Cons please.
Any other alternatives where they can get there money out as adults?
If you do sign up with Sharesies use code T2T for a $10 kickstart in their accounts.
Courtesy of an email from Tots to Teens
I'm not a financial advisor as well, but I did study Finance professionally, and have been quite active on investment, specifically in long-term share holdings.
I guess there are always pros and cons of investing at platform like Sharesies, etc. It suits people who want the convenience of purchasing their own stock, without having to go to a financial advisor, wealth fund managers, etc. It's also more convenient when you are planning to buy and sell stock (as you can do so very very quickly).
I personally am not on Sharesies, I find that Stake is better if you want to invest in US stocks and ETF. They have 0 fees for trading (buy and sell), no commission fee, and the only fees that you got is when you are depositing money. They also take care of your US tax form, so no hassle on that. It might really come down to preference, but I personally have been using Stake for 3 years and it's been really great.
In terms of investment, I always find that S&P500 ETF is the best, safest option when you don't want to actively trade (meaning having to do research, etc). They've been around since 1957, and YoY average return is about 8%. It's a low-cost index fund that covers the largest 500 companies in the US. You will even find people like Warren Buffet recommending to people that the best investment strategy would be 90% on S&P500 and 10& on bonds. And given their reputation, you'd never have to worry about companies going bust, as they keep track of the top 500 companies currently trading and adjust their index-fund appropriately without you having to personally choose each individual company stock.
Again, this might vary depending on your preference, but also your comfort level. Some people are always put off by the idea of investing into shares, and would rather getting a much smaller return with a very safe investment like term deposit. But I feel that broad, diversified index fund would always be my top choice, minimising my risk and I don't have to think too much about researching individual companies and where to invest.
I concur about going with an ETF for all the reasons mentioned by @dealhunters, but also for another reason:
I have never been comfortable putting my money into a fund where withdrawals could be put on hold by the fund manager themself. At least with an ETF, any trading halt has to be done through the exchange that the ETF is listed on, and the bid / offer spread (and depth if you have access to it) is transparent and not controlled by the fund manager.
I suspect that there have been many investors in managed funds who would have happily (and with complete understanding of the situation) bailed from a fund, even taking a significant loss, but had that option taken away from them when the fund manager stopped all redemptions.
If a non-listed fund happened to go under (highly unlikely with a tracker fund, especially if it has low or no leverage, but anything is possible of course), you might have to wait years to get any payout, whereas if it is listed, you can get out any time you like, maybe taking more of a hit, but happy to be able to invest your money elsewhere immediately.
Alan.
Well worth looking into this. I have just 1 US stock I picked (for a definite reason) coming up 2 years ago. Has got up to 4x what I paid, currently doubled and I am pretty sure it will go back up to pre pandemic values of 9 times. But just a bit of fun for me not something for the Grandchildren. :)
If you're just looking at funds then InvestNow is a good option. There are minimum purchase amounts though. $250 for one offs or $50 for auto invests.
You could maybe look at setting up an investment fund account through Simplicity? More info on the FAQ page: https://simplicity.kiwi/investment-funds/investments-faqs
This is what we have for both our kids and have been happy with it, no issues. Easy to set up. Minimum initial investment amount is $1000.
this sounds good, nice to hear it is working for you.
Many thanks to the replies so far. I will look into them. I am not adverse to risk and have been dabbling for years.
Need to know how the ownership transfers to the children, especially if am not "with it" by then.
With Sharesies, the children can request to take control of their own portfolio by default when they turn 25.
Otherwise, you can allow them to take over themselves once they turn 18.
thanks for the info.
Not really anything to do with the investments, but no matter what you choose if at all for the investment, it is a good idea to setup a WILL and put all this in legal terms so that in future it is easier to deal all kinds of portfolios when are you not around. Kids would really appreciate once they can understand what you did for them.
I absolutely endorse this!
Sharesies pros and cons.. (not a financial advisor). just my observations, and comparisons.
Pros:
low fees for small transaction, allows for fractional shares.. so good for small investment.
access to a reasonable range of shares and investment options
often do not charge extra transaction fees on capital raise.
Cons:
No interest on any deposits
DIY, or no reports
can not undertake company's dividend reinvestment at a discount.
depth tables etc. cost extra fee (where as free in Jarden or ASB) which is important esp for shares with limited liquidity.
if buying off capital raise, shortfall book build etc.. often gets a less favourable outcome compared to other stockbroker, e.g. if an offer that will be popular and hence share price goes up, often you do not get any at all or much more heavier scaling than other brokers, but if they are less popular and went down you are much more likely to get full amount.
Platform not that great to use, little confirmation after you have submitted bids on capital raise, etc..
quite a bit of errors in email confirmation, saying there is not enough money in my sharesies account, when in fact enough.. (but gets corrected, but can be quite disconcernting).
hard to contact them in a hurry.
so for investment for larger amount, sharesies is not a great option, (can you earn interest to compensate for the minor differences in transaction fees for larger investment), as well as understanding the depth chart and recent trade prices, (not 30 mins delay).
there is separate discussion about the passive vs active funds.. the key point is not about looking at average, but check out who is the outstanding one in terms of consistently good return and yet defensive enough to limit downturns over the long term.. as well as understand their approach and methods in investment (as well as the companies that they had invested in) to understand if they can sustain such performance going forward. while people say risk and return are correlated in general, but there is an outlier (for kiwisaver and managed fund) at a similar level of risk and offers better return over time but the morningstar charts are reflection of past performance, and may not predict future performance.
Fyi I'm not an financial advisor just an ordinary bloke.
I would probably recommend a managed fund with someone like fisher fund or kiwi wealth etc etc
Shareies is a good platform' it does make it easy to purchase stock. However with something as important as leaving money for grandchildren, I personally would find shares too risky. Company goes bust shares are worth nothing etc, unless you the type he keep a track of companies and the market.
Managed funds i find far easier for longer term investment… put money in and can basically leave it, you can choose risk categories etc, Yes there are fees but I find them rather small vs gains made they have a team that does the work for you. Usually you can withdraw in a small time frame
But if you are a shares person, Shareies has pretty low fees and its easy to use. I've had zero issues using it