Today – Safe Ways to Invest in Your Kids
There are so many reasons to start saving money for your kids. Tuition rates have been steadily rising across the UK, while real estate in the UK’s biggest cities has become increasingly unaffordable, as prices are buoyed by an exodus from London.
The problem parents face is uncertainty. They want to make sure that the money they set aside for their kids today is still there when their kids need it, whether that’s 10, 15, or 20 years from now. Not only do they need to manage risks, they need it to be worth something, despite inflation.
Obstacles to Successfully Investing for Your Kids
It’s a conundrum every investor faces with their money, but there are some unique issues that come with investing for your kids:
- Hard deadline: when you’re saving for an education fund, there’s not much wiggle room in terms of when you’re going to need that money. A hard deadline reduces your risk tolerance, as you need that money when you need it.
- Changing risk tolerance: as you get closer to that deadline, your risk tolerance decreases. You may need to take a more active role in managing the fund in order to grow faster in the early years and pivot to safe investments later on.
- The pound: Sterling is may be set to resume a century-long decline as it exits the common market. Brexit will severely limit growth opportunities that made governments and stock brokers in the ’80s so keen on entering the EEC in the first place.
How to Invest for the Future – Safe Ways to Invest in Your Kids
The UK’s economic future is uncertain, that’s for sure. There are few safe bets for investments that will grow enough to maintain their value in the face of inflation and currency devaluation. Here are a few to consider:
- Gold: When you give your kids gold bullion you achieve two investment goals. The first is stability in an unpredictable market. You can use this asset to offset risks such as market volatility and inflation. The second is that you teach your kids about the value of investing. Gold is a real thing they can see and hold. They know they have it and they can look up what it’s worth. They’ll see how saving some money now turns into more money later in a very concrete way. You can buy gold bullion online in the form of coins and bars. You may want to invest in a safe to keep them protected.
- Government and corporate bonds: The bond market is a more cautious approach to investing than putting all of your eggs in the stock market basket. When you buy a bond, you’re effectively lending money. Government bonds tend to be the safest, as they are the most likely to always be around to pay back their debts.
- Preferred stocks: preferred stocks are stocks that get paid out after bondholders, but before the rest of the shareholders. It carries a medium risk that strikes a balance between growth and security.
- Cryptocurrency: while this may the riskiest option of them all, cryptocurrency is finding its groove as a business solution, mobile payment option, and maturing as an investment product. Consider this option with caution, but it could be an alternative if you’re worried about the future of the pound.
Investing in your kids will give them a huge leg up tomorrow. Find the right investments that will grow and protect their money.
I hope you have found this post on Safe Ways to Invest in Your Kids to be useful