What can I do to accumulate savings for my children? Their grandparents always give them money as a gift and I would like to put this away for their future rather than spending it now.
Thanks for the question Mary.
I am presuming your children are under 18 and therefore they are not allowed to own shares in their own name.
Also, any income they have attracts a high tax once their earnings exceed $416 a year.
You need therefore to work within these restrictions. I also presume you want to have the money in their name rather than yours so that they have a sense of ‘ownership’.
I would therefore be suggesting investment bonds. They are a tax paid investment (the company pays tax on earnings at the company tax rate) .and there is generally nothing to declare on anyone’s tax return. The other advantage is that there is no worry of personal capital gains tax, so the bond can be transferred to others at any time..
If you invest in a share-based investment bond then you can also use this to educate your children about the share market and in particular how the share market moves!
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