SmartShares for Kids!
If you would prefer to listen to me read this blog post, please click on the play button.
I’m writing this on a Saturday in late August after a really busy school week for my daughter. She is rapidly approaching double figures which freaks me out a bit as she gets more independent by the day. You could say that her education this week was “varied”. I’m sure that when I was at school we did awesome stuff too but why is it that the standouts for me were spending my lunchtimes in the classroom with my arms above my head as punishment for talking? True story! Ha ha ha, they failed to cure me, I still talk ALL THE TIME!
I don’t know what she did on Monday and Tuesday at school this week but things got more fun as the week progressed. I’m sure they learn lots of stuff all the time but it takes a bit of digging to find out what she has been up to when she gets home.
“Did you have a great day?” I ask.
“Yes, good” is a typical response.
Her education this week (amongst other things I will never hear about) involved teamwork and building a self supporting bridge which spanned the distance between two tables. That lead to some good engineering discussions around the dinner table and the realisation that watching MythBusters on TV was about to pay off!
On Wednesday we went skiing up at Cardrona with a bunch of kids from Year 1 to Year 8, WITH their Principal who was dressed as a giraffe all day. Does anyone recall their Principal EVER wearing a giraffe onesie all day? I think not. Wherever she went on the mountain she had a trail of kids who spotted her and zoomed off after her. The beauty of living in this area is that every school is offered ski days and it is open to families as well. For $80 we each had a lesson, gear hire and a full day on the mountain. The fun itself was FREE!
After their lesson my daughter and a bunch of friends did two fast runs on the learner slope, then straight onto the chair lift and off into the distance they went. Both Jonny and I went for the day and imagined ourselves spending it coaching her down the mountain but NOPE, she was off. We only managed to do one run with her all day and otherwise only saw her when her and her mates got hungry.
Sometimes/often the beauty of this country stops me in my tracks and I can’t believe that I got to spend an amazing day up on that stunning mountain. Added to this I met some nice people on the chair lift too: Aucklanders, Spaniards, Australians and a really cool 11 year old from Hong Kong were the standouts. I’m so lucky Mr Robinson from school never managed to beat my chattiness out of me, despite his best attempts, or how would I have coped on a chairlift with a bunch of strangers otherwise?
To round out her education for the week she went to the Central Otago Cross Country event over in Arrowtown on Thursday where she did really well for a kid with no competitive instinct who also refused to train. Luckily she has a teacher who has them regularly outside the classroom running around which would hopefully make her fit enough.
What the heck does describing my daughter’s school week have to do with a personal finance blog I hear you ask? Sit tight, I’m getting around to the point.
Despite what from the outside looked like a lot of skiving off school there was still a whole lot of learning going on. Independence and self management were the standouts for me. In today’s society we keep our kids in line of sight because we worry about them. Seeing her take control and head off with her friends up a mountain AND come safely back down was pretty cool. Teamwork, strategy, reading, listening, problem solving etc etc, it was all there.
The one thing that is missing on the busy school calendar is of course learning about money management. For sure they learn how to add, subtract, multiply and divide but they don’t learn how to budget, live within their means, save and invest. Maybe/hopefully that will come into the curriculum one day but from where I am sitting I can see that it is already a bulging calendar that lacks the time and government monetary support to add much more into it.
Where are the kids going to learn about this stuff then? Off their parents of course. Which for some kids is a terrible idea, especially if their folks are terrible with money themselves. With a wink, I repeatedly tell my daughter that she is lucky to have scored two AWESOME parents. Fortunately she is still young enough to agree, but I fear it won’t last much longer! Financial literacy is a subject that I’m capable of homeschooling her on and it’s going to go waaaay beyond counting cans of beans at the supermarket and calling it maths.
You already know that we openly discuss PF around the dinner table. We have some great discussions about just the day to day stuff from writing a list when we go grocery shopping so we don’t overspend to showing her online when I pay her some pocket money, right through to big decisions like how much a holiday might cost. Most months (we get slack sometimes) she gets a bank statement for the month prior detailing what she has earned, spent and saved and already she is working out that she can get “money for nothing” in the form of interest payments.
Here is something I recommend you do.
Try to explain to a young kid you may know how paying and earning interest works. They are generally incredulous that if I borrow money off someone I have to give that money back AND some. My daughter’s response was “NO WAY, I’m only going to give you back the money I borrowed, WHY should I give you more?” They think it’s crazy! And very quickly they grasp the concept of earning interest and not paying it. If they keep that in mind they should stay out of mindless debt.
She is still too young to understand it all, plus she is not as interested as I am BUT she is getting told about it none the less and it is definitely sinking in. If we have not produced her bank statement at the start of each month she pretty quickly asks us for it.
A few weeks back I closed off the Managed Fund that she had with ANZ. The fund started off with lumps sums in it which was kindly given to her by grandparents when she was born. Since then each month $50 had been drip feeding into it and when closed it had $3,000. ANZ put the money back into the account I have set up for her off my own account last week. Now it ‘s time to put that money back to work.
Yes, the fund had been performing well but in early blogs I have mentioned how much fees can erode an investment over a long period of time. She has now been investing since she was born and the plan is for this to continue over her very long life. So, it’s important I do all I can to put her money somewhere where she can get a steady return and not pay over the odds in fees.
Interestingly (to me at least) when I was researching this I found the following document that I have not seen before regarding the fund I just pulled her out of: Growth Fund Upate
This gives the best breakdown I have found of this fund and the fees it charged (1.37%). Granted it had been performing pretty well, but despite this she has been in it for the best of times and perhaps it is about to start going down? Who knows, past returns are NOT an indication of future returns remember?
I’m going to be signing her up for SmartShares and to do this for a minor means that she will be linked to my own account as children can’t directly hold SmartShares. She will however be given her own Common Shareholder Number (CSN) so her units will remain separate from my own and her units will be tagged with her own name. Technically (and legally) they will be mine but when she turns 18 and/or is old enough/wise enough I will sign them over to her by selling them all off and then she can buy them in her own name. She had better be nice to her Mum and Dad when it is time for the handover! Otherwise I’m booking Jonny and I an all expenses paid cruise around the world…
When I contacted SmartShares they also told me about another product that is specifically set up for investments on behalf of children (whether your own or someone else's). It is My Future Fund and its with SuperLife (their sister company). This is a cut and paste from their email:
This will be an account in your child's name (the Member) where you are set up as the Future Fund Guardian for the account. Until the Member is 25, the Future Fund Guardian’s signature is required for all benefit payments, investment strategy changes and advising nominated beneficiaries. When the Member turns 25, the role of the Future Fund Guardian ceases and the Member takes responsibility for all decisions and the Future Fund Account becomes a normal SuperLife Account. SuperLife offers the ability to invest into any of the SmartShares funds in addition to its own managed funds.
This does indeed sound like a good option but I’m a somewhat lazy investor. I’m already all set up with SmartShares and don’t want to go through all the signup process somewhere else. I don’t think I can handle yet another login and password! You might be different, so go and check it out if you think this is a better option for you. Let me know how you get on.
As I have done previously I went online to www.smartshares.co.nz and hit the Invest Now tab. Under Investor Type I selected children. I entered her name but the rest of the application required my own details. As I have blogged about before it is a pretty straight forward process. If this is all gibberish to you check out my a previous blog about how to buy SmartShares here: www.thehappysaver.com/blog/buying-shares-in-27-minutes
If you are still looking for more information just SEARCH for the word SmartShares on my blog and you will find heaps more.
Just a few clicks later I was done and now I just have to wait a while for them to complete the paperwork, take the money from my account and let me know that it is all good to go. Today is the 26th August and I’ve actually missed the cut off for the month, so I have to now wait until nearing the end of September for it to happen. That is probably the only thing I don’t like about their system but I’ve gotten used to it now. At least I know that it is all set up to go though!
So, that is about that folks! She will no doubt be DELIGHTED when I tell her over the breakfast table this morning that she has had a change of investments, is saving on fees and will be riding the market up and down over the coming years. Actually, this news is just far too exciting to keep to myself. I’m going to go and wake her up…