1 00:00:00,280 --> 00:00:03,320 Speaker 1: Welcome to start here a very special mini series inside 2 00:00:03,360 --> 00:00:07,160 Speaker 1: Sugar Mamma's Fireplay that is created just for you. This 3 00:00:07,360 --> 00:00:11,320 Speaker 1: is your safe, supportive space to ask the financial questions 4 00:00:11,440 --> 00:00:15,600 Speaker 1: on your mind. No judgment, just clarity. So whether you're 5 00:00:15,640 --> 00:00:20,400 Speaker 1: feeling overwhelmed, stuck, or don't know where to begin, this 6 00:00:20,560 --> 00:00:24,919 Speaker 1: series offers simple, honest, practical guidance to help you take 7 00:00:24,920 --> 00:00:29,480 Speaker 1: that all important first step and let your journey begin. 8 00:00:30,320 --> 00:00:32,960 Speaker 1: At any time, you can send me a DM on 9 00:00:33,200 --> 00:00:36,640 Speaker 1: Instagram at Sugar Mama TV or my personal account Canna 10 00:00:36,680 --> 00:00:40,279 Speaker 1: Campbell Official and ask me the questions to help you 11 00:00:40,400 --> 00:00:44,000 Speaker 1: get started. Now. Of course, I can't give you personal 12 00:00:44,080 --> 00:00:46,960 Speaker 1: financial advice that must be done under the premise of 13 00:00:46,960 --> 00:00:50,320 Speaker 1: a statement of advice a financial plan, but in each 14 00:00:50,400 --> 00:00:55,040 Speaker 1: episode I will do my absolute best to share the ideas, 15 00:00:55,280 --> 00:01:00,520 Speaker 1: the strategies, the options, even the inspiration that will empower 16 00:01:00,560 --> 00:01:04,920 Speaker 1: you to move forward with confidence and simply get started 17 00:01:05,240 --> 00:01:09,720 Speaker 1: and enjoy the journey and adventure ahead of you. So 18 00:01:10,160 --> 00:01:13,800 Speaker 1: let's begin with today's episode, and that is how should 19 00:01:13,840 --> 00:01:16,920 Speaker 1: I invest ten thousand dollars for each of my kids? 20 00:01:19,600 --> 00:01:22,200 Speaker 1: All Right, So, as I mentioned, today's episode is about 21 00:01:22,240 --> 00:01:26,759 Speaker 1: investing for kids. I received a DM on Instagram, and 22 00:01:27,000 --> 00:01:30,440 Speaker 1: this is what is very thoughtful. Mother wrote, Hi, Canna, 23 00:01:31,280 --> 00:01:35,560 Speaker 1: I'm absolutely loving your start Here series. I already have 24 00:01:35,760 --> 00:01:40,400 Speaker 1: a question for you. Approximately two years ago I lost 25 00:01:40,400 --> 00:01:43,680 Speaker 1: my father and as part of the inheritance, I have 26 00:01:43,920 --> 00:01:48,280 Speaker 1: ten thousand dollars to invest for each of my three sons. 27 00:01:48,920 --> 00:01:52,000 Speaker 1: That money has been sitting in a savings account, and 28 00:01:52,200 --> 00:01:56,480 Speaker 1: I simply do not know how to invest for the kids. 29 00:01:57,080 --> 00:01:59,120 Speaker 1: I know that I want to invest for the long run, 30 00:01:59,160 --> 00:02:00,680 Speaker 1: and I know that I want to look at something 31 00:02:00,720 --> 00:02:03,120 Speaker 1: like a listed investment company as you have done for 32 00:02:03,200 --> 00:02:06,600 Speaker 1: your children. However, I just can't get started because I 33 00:02:06,640 --> 00:02:10,240 Speaker 1: don't understand the different options from when it comes to investing, 34 00:02:10,840 --> 00:02:13,519 Speaker 1: what's available to me and what is actually the best 35 00:02:13,600 --> 00:02:17,000 Speaker 1: option for me. I want this money to grow over 36 00:02:17,040 --> 00:02:20,200 Speaker 1: the long run. So any ideas, any tips, or any 37 00:02:20,200 --> 00:02:22,400 Speaker 1: things you can explain to me to help me get 38 00:02:22,440 --> 00:02:27,840 Speaker 1: started would be greatly appreciated. All right, Okay, for this 39 00:02:27,880 --> 00:02:30,160 Speaker 1: particular listener, I want to take a moment to say 40 00:02:30,360 --> 00:02:35,760 Speaker 1: I'm so sorry for your loss. Grief is physically painful, 41 00:02:36,040 --> 00:02:38,919 Speaker 1: it can be complicated, and just when you think you're 42 00:02:39,040 --> 00:02:41,960 Speaker 1: over it, it can spack you back in the face and 43 00:02:42,200 --> 00:02:44,240 Speaker 1: feels like you're sort of back to square one again. 44 00:02:44,360 --> 00:02:47,639 Speaker 1: So I really hope that you know, the last two 45 00:02:47,720 --> 00:02:52,880 Speaker 1: years of his passing you found the space and sense 46 00:02:52,880 --> 00:02:55,960 Speaker 1: of peace and to heal from this great loss of 47 00:02:56,000 --> 00:02:58,800 Speaker 1: losing a parent. I would also like to say, what 48 00:02:58,880 --> 00:03:04,520 Speaker 1: an incredibly generous legacy by your father, like, how incredibly 49 00:03:04,520 --> 00:03:08,360 Speaker 1: beautiful and how incredibly special. So I feel honored that 50 00:03:08,360 --> 00:03:10,600 Speaker 1: you've actually reached out to me to ask for my 51 00:03:10,720 --> 00:03:14,520 Speaker 1: general advice as to how to simply get started with 52 00:03:15,000 --> 00:03:17,240 Speaker 1: this money that's currently sitting in a savings account that 53 00:03:17,280 --> 00:03:21,440 Speaker 1: you want to start investing for your three sons long term, 54 00:03:21,520 --> 00:03:24,760 Speaker 1: you know, financial freedom and perhaps even kickstart their own 55 00:03:24,800 --> 00:03:27,760 Speaker 1: investing journey. So what I'm going to do is explain 56 00:03:28,600 --> 00:03:32,400 Speaker 1: the three key options for you to invest this money, 57 00:03:32,919 --> 00:03:34,880 Speaker 1: and then I'm going to explain the pros and cons 58 00:03:34,920 --> 00:03:38,040 Speaker 1: of each one. And of course, as you know, this 59 00:03:38,080 --> 00:03:41,240 Speaker 1: is general advice and you can use this information to 60 00:03:41,480 --> 00:03:45,000 Speaker 1: help you get started. I will also touch on in 61 00:03:45,040 --> 00:03:47,480 Speaker 1: more detail as to what I have done for my 62 00:03:47,640 --> 00:03:51,240 Speaker 1: three children, how I have invested for them, the strategy, 63 00:03:51,760 --> 00:03:55,280 Speaker 1: and even though this is general advice, I will mention 64 00:03:55,440 --> 00:03:58,320 Speaker 1: again what I invested in. But please don't ever think 65 00:03:58,360 --> 00:04:01,360 Speaker 1: others do it, candidate, because that is fraught with danger. 66 00:04:01,760 --> 00:04:05,240 Speaker 1: My goals are very different to your goals. Okay, So 67 00:04:05,400 --> 00:04:10,320 Speaker 1: option number one is to invest in your own name. 68 00:04:10,480 --> 00:04:13,800 Speaker 1: So you could take that thirty thousand dollars and combine 69 00:04:13,880 --> 00:04:15,800 Speaker 1: value and invest it in one big hit, or you 70 00:04:15,800 --> 00:04:19,360 Speaker 1: could invest it separately in three different areas and by 71 00:04:19,400 --> 00:04:21,159 Speaker 1: a parcel of shares or whatever it may be for 72 00:04:21,240 --> 00:04:24,400 Speaker 1: ten thousand dollars. Now, when you do that, the money 73 00:04:24,640 --> 00:04:28,080 Speaker 1: or the investment stays under your name and under your 74 00:04:28,120 --> 00:04:30,880 Speaker 1: tax file number. So you would need to sort of 75 00:04:30,920 --> 00:04:33,640 Speaker 1: mentally think, okay, well, if I've bought ten thousand dollars 76 00:04:33,720 --> 00:04:36,440 Speaker 1: worth of shares in ABC company, and I've bought ten 77 00:04:36,440 --> 00:04:39,600 Speaker 1: thousand dollars the shares in x y Z company and 78 00:04:39,880 --> 00:04:42,040 Speaker 1: another ten thousand dollars with the shares another company, you 79 00:04:42,080 --> 00:04:45,839 Speaker 1: need to mentally, I guess Earmark, all right, that's John's money, 80 00:04:45,920 --> 00:04:49,279 Speaker 1: that's Tom's money, and that's Peter's money because legally is 81 00:04:49,320 --> 00:04:53,279 Speaker 1: actually in your name. Now, the benefit of this is 82 00:04:53,279 --> 00:04:56,560 Speaker 1: that it does keep it really simple, particularly when it 83 00:04:56,600 --> 00:04:59,560 Speaker 1: comes to tax time, because it's attached to your HIN 84 00:04:59,680 --> 00:05:02,040 Speaker 1: number and of course your tax file number and your 85 00:05:02,040 --> 00:05:05,440 Speaker 1: bank details. Of course, it means you stay in full 86 00:05:05,480 --> 00:05:08,120 Speaker 1: control at all times. You know if you want to 87 00:05:08,160 --> 00:05:10,240 Speaker 1: make changes, you want to sell the investments, you want 88 00:05:10,279 --> 00:05:11,919 Speaker 1: to move them, you want to take the dividends and 89 00:05:12,000 --> 00:05:14,640 Speaker 1: buy something else, And of course you know you have 90 00:05:14,720 --> 00:05:18,680 Speaker 1: that complete flexibility at all times because legally it's in 91 00:05:18,720 --> 00:05:23,719 Speaker 1: your name. The downside of this is is actually exactly 92 00:05:23,760 --> 00:05:27,919 Speaker 1: that it belongs to you, not your child, and depending 93 00:05:27,960 --> 00:05:30,920 Speaker 1: on your financial situation, which I don't know anything about, 94 00:05:30,960 --> 00:05:34,680 Speaker 1: and including your financial goals or risk profile, this money, 95 00:05:34,720 --> 00:05:38,039 Speaker 1: whether it's ten thousand dollars or thirty thousand dollars, is 96 00:05:38,200 --> 00:05:43,200 Speaker 1: actually counted towards Centerlink or any sort of assessment of 97 00:05:43,400 --> 00:05:47,599 Speaker 1: entitlements that you might be you know, achieved I should say, 98 00:05:48,120 --> 00:05:51,599 Speaker 1: or be entitled to now. At the same time, though, 99 00:05:51,640 --> 00:05:54,200 Speaker 1: if you've got thirty thousand dollars sitting a savings account, 100 00:05:54,520 --> 00:05:57,520 Speaker 1: these assets would still count towards center Link or any 101 00:05:57,560 --> 00:06:01,320 Speaker 1: government entitlements, so it's it's not too different to what 102 00:06:01,320 --> 00:06:04,640 Speaker 1: you've already got. The other downside is that you pay 103 00:06:04,760 --> 00:06:09,159 Speaker 1: tax on this income, this thirty thousand dollars at your 104 00:06:09,279 --> 00:06:13,719 Speaker 1: marginal tax rate, So depending on your tax rate. This 105 00:06:13,839 --> 00:06:15,200 Speaker 1: might be a good thing or it might be a 106 00:06:15,200 --> 00:06:18,000 Speaker 1: bad thing. But again, at the same time, that money 107 00:06:18,040 --> 00:06:20,000 Speaker 1: that's sitting in a savings account, and I'm going to 108 00:06:20,040 --> 00:06:23,040 Speaker 1: assume it's in a high interest earning savings account, you've 109 00:06:23,040 --> 00:06:24,680 Speaker 1: got to pay tax on that money as well at 110 00:06:24,720 --> 00:06:29,479 Speaker 1: your marginal tax rate. Now, sometimes in situations where you've 111 00:06:29,480 --> 00:06:32,840 Speaker 1: got two parents and one is say working, the other 112 00:06:32,880 --> 00:06:34,960 Speaker 1: one might be say working part time or be a 113 00:06:35,000 --> 00:06:39,240 Speaker 1: full time care they may decide to do this where 114 00:06:39,240 --> 00:06:43,360 Speaker 1: they put the investments in the lower income earners because 115 00:06:43,400 --> 00:06:46,200 Speaker 1: there obviously they're on a lower tax rate and the 116 00:06:46,279 --> 00:06:50,000 Speaker 1: eroding impact of tax is not as dramatic. So you know, 117 00:06:50,120 --> 00:06:53,080 Speaker 1: that might be something worth considering, depending on your tax 118 00:06:53,080 --> 00:06:54,839 Speaker 1: status and if you're in a relationship and what that 119 00:06:54,960 --> 00:06:58,800 Speaker 1: other person's you know, tax rate is. And of course 120 00:06:58,839 --> 00:07:00,000 Speaker 1: you've got to make sure that you have a life 121 00:07:00,040 --> 00:07:02,120 Speaker 1: level of trust because again legally it's in their name. 122 00:07:02,160 --> 00:07:04,080 Speaker 1: They could take that money and run off with it, 123 00:07:04,160 --> 00:07:08,440 Speaker 1: so be very careful, of course, and get professional personal 124 00:07:08,480 --> 00:07:13,280 Speaker 1: advice beyond this obviously this podcast episode. Now, the second 125 00:07:13,280 --> 00:07:18,720 Speaker 1: option is is you invest in your three children's names individually. 126 00:07:19,360 --> 00:07:22,440 Speaker 1: You open up an investment under your child's name, and 127 00:07:22,480 --> 00:07:24,800 Speaker 1: you apply for them to have a tax file number, 128 00:07:24,960 --> 00:07:28,360 Speaker 1: and that is relatively easy to do. The upside of 129 00:07:28,400 --> 00:07:30,560 Speaker 1: this is that it is legally their money. It's you know, 130 00:07:30,800 --> 00:07:34,320 Speaker 1: it's great for teaching them about investing ear early in 131 00:07:34,360 --> 00:07:36,840 Speaker 1: life and is very empowering. It it's very clean and 132 00:07:36,960 --> 00:07:39,960 Speaker 1: very separate. That's their investment portfolio that can log in, 133 00:07:40,040 --> 00:07:42,119 Speaker 1: they can have a look at, they can watch it grow. 134 00:07:42,720 --> 00:07:46,600 Speaker 1: This is something that is very exciting for a young child, 135 00:07:46,640 --> 00:07:49,480 Speaker 1: and you know, it really does make them feel like 136 00:07:49,680 --> 00:07:53,600 Speaker 1: this is theirs and they have responsibility of it. The 137 00:07:53,920 --> 00:07:57,200 Speaker 1: issues though, with this are a little bit more complicated. 138 00:07:57,560 --> 00:08:03,440 Speaker 1: So children under age eighteen are hit with penalty tax 139 00:08:03,560 --> 00:08:09,920 Speaker 1: rates on unearned income. Now, unearned income is earning interest, 140 00:08:10,160 --> 00:08:13,880 Speaker 1: it's earning dividends, earning rent. It's not if your child 141 00:08:13,920 --> 00:08:16,760 Speaker 1: goes and works part time it's say the petrol station 142 00:08:17,120 --> 00:08:20,240 Speaker 1: or works part time sat McDonald's. This is that is 143 00:08:20,360 --> 00:08:24,560 Speaker 1: earned income. The passive income here, regardless where it comes from, 144 00:08:24,680 --> 00:08:28,840 Speaker 1: is considered for children under age eighteen unearned income, which 145 00:08:28,880 --> 00:08:34,040 Speaker 1: means it's taxed up to sixty six percent on anything 146 00:08:34,240 --> 00:08:39,000 Speaker 1: over four hundred and sixteen dollars per year as at 147 00:08:39,040 --> 00:08:43,840 Speaker 1: this time of publishing this episode. Now, this may not 148 00:08:44,000 --> 00:08:47,040 Speaker 1: be a major issue if you can see that the 149 00:08:47,160 --> 00:08:51,880 Speaker 1: child's income, that is, their passive income, will never exceed 150 00:08:52,440 --> 00:08:55,360 Speaker 1: four hundred and sixteen thousand dollars in that financial year, 151 00:08:55,360 --> 00:08:57,400 Speaker 1: and of course the tax rates changed every year. You 152 00:08:57,400 --> 00:08:59,880 Speaker 1: need to keep that in mind. For example, you know, 153 00:09:00,000 --> 00:09:03,400 Speaker 1: if someone was investing you know, say ten thousand dollars, 154 00:09:03,480 --> 00:09:05,680 Speaker 1: and they knew that it was going to only pay 155 00:09:05,679 --> 00:09:07,920 Speaker 1: a dividend it'll say two percent, because it was more 156 00:09:07,920 --> 00:09:12,000 Speaker 1: of a capital growth opportunity investment, their passive income would 157 00:09:12,040 --> 00:09:15,520 Speaker 1: therefore be two hundred dollars a year, and you know 158 00:09:15,520 --> 00:09:17,240 Speaker 1: they wouldn't be hit with this tax rate because it's 159 00:09:17,240 --> 00:09:21,240 Speaker 1: well under that four hundred and sixteen thousand dollars threshold. However, 160 00:09:21,760 --> 00:09:24,320 Speaker 1: being ten thousand dollars, and if you're looking at something 161 00:09:24,440 --> 00:09:27,280 Speaker 1: like a listed investment company that you mentioned, you know, 162 00:09:27,320 --> 00:09:30,080 Speaker 1: as soon as that income is earning, say five percent 163 00:09:30,559 --> 00:09:33,880 Speaker 1: or even four percent, you're coming very close to that 164 00:09:33,920 --> 00:09:36,400 Speaker 1: threshold where everything above that is going to be taxed 165 00:09:36,440 --> 00:09:40,200 Speaker 1: at sixty six percent. So this may not be an 166 00:09:40,320 --> 00:09:43,480 Speaker 1: issue depending on the map you decide to invest, but 167 00:09:43,520 --> 00:09:45,360 Speaker 1: it's something to be really aware of and not just 168 00:09:45,400 --> 00:09:47,160 Speaker 1: think about it short term, but think about it a 169 00:09:47,200 --> 00:09:49,720 Speaker 1: long term. If for example, one of your sons is 170 00:09:49,760 --> 00:09:52,480 Speaker 1: say three years old, that means they're going to be investing, 171 00:09:53,080 --> 00:09:55,640 Speaker 1: you know, for the next fifteen years. So it is 172 00:09:55,800 --> 00:09:58,520 Speaker 1: quite possible that if ten thousand dollars is invested a day, 173 00:09:58,600 --> 00:10:01,360 Speaker 1: will quickly exceed that for hundred and sixteen, particularly with 174 00:10:01,800 --> 00:10:04,800 Speaker 1: dividend reinvestment, which I'll come to in a bit. So 175 00:10:05,240 --> 00:10:07,240 Speaker 1: if it's someone who's had I've got one thousand dollars 176 00:10:07,280 --> 00:10:09,560 Speaker 1: to invest for a fifteen year old, you could potentially 177 00:10:09,600 --> 00:10:12,160 Speaker 1: do this because a one thousand dollars is not going 178 00:10:12,200 --> 00:10:14,440 Speaker 1: to make you four hundred and sixteen dollars or above 179 00:10:15,200 --> 00:10:18,280 Speaker 1: each year, unless you, of course, you're gambling with that money. 180 00:10:18,640 --> 00:10:22,160 Speaker 1: The other thing to consider is with this, they gain 181 00:10:22,400 --> 00:10:26,160 Speaker 1: full control at age eighteen, which may not be ideal. 182 00:10:26,200 --> 00:10:27,800 Speaker 1: And this is where you've got to really use your 183 00:10:27,800 --> 00:10:30,559 Speaker 1: intuition and your knowledge behind your children and their level 184 00:10:30,559 --> 00:10:34,960 Speaker 1: of financial literacy and where they where their aspirations lie, 185 00:10:35,000 --> 00:10:37,560 Speaker 1: and their generale and interest in how I guess so 186 00:10:37,640 --> 00:10:41,040 Speaker 1: much how much self control and discipline they have, because 187 00:10:41,559 --> 00:10:44,160 Speaker 1: they could just take that money at age eighteen and 188 00:10:44,200 --> 00:10:46,200 Speaker 1: go and blow it and go and buy a car, 189 00:10:46,400 --> 00:10:49,120 Speaker 1: or you know, do something with this money that you're 190 00:10:49,520 --> 00:10:51,920 Speaker 1: not particularly aligned to. And you've got to respect that 191 00:10:52,040 --> 00:10:55,640 Speaker 1: you have absolutely no control over this whatsoever. So for 192 00:10:55,720 --> 00:11:00,840 Speaker 1: some children who might have a potential underlying addiction or 193 00:11:01,320 --> 00:11:03,120 Speaker 1: you know, this may be something you want to tread 194 00:11:03,160 --> 00:11:05,920 Speaker 1: with caution. Again, get advice. And of course, if you 195 00:11:05,920 --> 00:11:09,040 Speaker 1: are expecting your children to ever be eligible for, say 196 00:11:09,040 --> 00:11:13,640 Speaker 1: a youth allowance or other government entitlements, this money will 197 00:11:13,640 --> 00:11:17,679 Speaker 1: obviously impact how much they are actually entitled to. So 198 00:11:17,760 --> 00:11:21,040 Speaker 1: you need to be very careful with this option number three, 199 00:11:21,600 --> 00:11:26,079 Speaker 1: and that is to invest as trustee for the child. Now, 200 00:11:26,280 --> 00:11:29,199 Speaker 1: this is where you hold the investments in your name, 201 00:11:29,440 --> 00:11:32,920 Speaker 1: that is, as trustee for each child. And for the record, 202 00:11:33,040 --> 00:11:36,200 Speaker 1: you don't need to have a formal trustee set up 203 00:11:36,720 --> 00:11:38,400 Speaker 1: or required. It is just going to make sure you've 204 00:11:38,400 --> 00:11:41,640 Speaker 1: got meticulous record keeping and that should be satisfactory. And 205 00:11:41,679 --> 00:11:43,200 Speaker 1: as I've mentioned, this is actually what I've done for 206 00:11:43,200 --> 00:11:46,040 Speaker 1: each of my children. The benefit of doing this is 207 00:11:46,040 --> 00:11:49,120 Speaker 1: is the income is still taxed at your marginal tax rate, 208 00:11:49,720 --> 00:11:52,680 Speaker 1: but at least you're able to avoid the issues with 209 00:11:52,840 --> 00:11:56,520 Speaker 1: those sixty six percent tax rates for over four hundred 210 00:11:56,520 --> 00:12:00,880 Speaker 1: and sixteen dollars a year, So this is a potentially 211 00:12:00,960 --> 00:12:04,000 Speaker 1: a better option considering the fact that you've got ten 212 00:12:04,040 --> 00:12:08,880 Speaker 1: thousand dollars to start off this investment. The other benefit 213 00:12:08,920 --> 00:12:11,360 Speaker 1: of this is it keeps it really clear you know 214 00:12:11,559 --> 00:12:14,600 Speaker 1: that money is for your child because it's as trustee 215 00:12:14,640 --> 00:12:17,560 Speaker 1: for and you can't combine the three boys money into 216 00:12:17,600 --> 00:12:21,040 Speaker 1: one investment portfolio. It has to be separate for each child. 217 00:12:21,240 --> 00:12:25,280 Speaker 1: So you still have complete control over this money. But 218 00:12:25,360 --> 00:12:29,920 Speaker 1: the money is clearly for your child. Now, when they 219 00:12:30,040 --> 00:12:33,520 Speaker 1: reach age eighteen or in some cases some parents used 220 00:12:33,559 --> 00:12:36,040 Speaker 1: to this to age twenty one, you can transfer that 221 00:12:36,200 --> 00:12:40,080 Speaker 1: money over. And this is a bit of a gray area, 222 00:12:40,160 --> 00:12:43,360 Speaker 1: but from what I understand, this is tax free because 223 00:12:43,360 --> 00:12:46,679 Speaker 1: you've been holding it in trust for that child, so 224 00:12:46,720 --> 00:12:50,440 Speaker 1: that the shifting of the asset from being in trust 225 00:12:50,480 --> 00:12:54,720 Speaker 1: to the child should be not taxed. But again, always 226 00:12:54,840 --> 00:12:58,440 Speaker 1: get advice because I've heard different opinions as to the 227 00:12:58,520 --> 00:13:01,160 Speaker 1: tax on this, and from what I can see, it 228 00:13:01,240 --> 00:13:04,280 Speaker 1: should be able to be transferred to your child without 229 00:13:04,400 --> 00:13:09,319 Speaker 1: triggering capital gains tax. Now, the downside of this is 230 00:13:09,320 --> 00:13:12,280 Speaker 1: is obviously you still need to declare the income on 231 00:13:12,320 --> 00:13:13,800 Speaker 1: your tax return. So this is why I said you 232 00:13:13,800 --> 00:13:17,040 Speaker 1: could be meticulous with your account keeping. You've got three 233 00:13:17,080 --> 00:13:19,520 Speaker 1: different investment portfolows for each of the those three boys. 234 00:13:19,520 --> 00:13:21,120 Speaker 1: You need to be able to declare the dividends for 235 00:13:21,160 --> 00:13:24,040 Speaker 1: each child and put them on your tax return. So 236 00:13:24,760 --> 00:13:27,160 Speaker 1: this is important because you don't want to discover you've 237 00:13:27,160 --> 00:13:29,240 Speaker 1: missed this. The other thing you need to take into 238 00:13:29,240 --> 00:13:33,040 Speaker 1: consideration is the estate planning clarity. You need to make 239 00:13:33,080 --> 00:13:35,240 Speaker 1: sure that your will is updated to include this money 240 00:13:35,240 --> 00:13:39,160 Speaker 1: so it's really clear as to who that money belongs 241 00:13:39,200 --> 00:13:43,760 Speaker 1: to and it is noted in your will. Now, this 242 00:13:43,800 --> 00:13:45,560 Speaker 1: is where I want to talk to you about what 243 00:13:45,600 --> 00:13:49,640 Speaker 1: I've done in more detail. As I've mentioned in previous episodes, 244 00:13:50,080 --> 00:13:54,520 Speaker 1: again not just for educational purposes only, I have invested 245 00:13:54,880 --> 00:13:57,160 Speaker 1: as trust if each of my children. When each of them, 246 00:13:57,559 --> 00:13:59,600 Speaker 1: if my children were born, I bought a thousand dollars 247 00:13:59,679 --> 00:14:04,679 Speaker 1: worth of shares which are predominantly listed investment companies for 248 00:14:04,720 --> 00:14:08,360 Speaker 1: example Whitefield, and I bought just simply one thousand dollars 249 00:14:08,360 --> 00:14:10,520 Speaker 1: when they're born, and each time they've had a birthday, 250 00:14:11,040 --> 00:14:14,600 Speaker 1: I've invested one thousand dollars for each of them. Now 251 00:14:14,920 --> 00:14:19,560 Speaker 1: listed investment companies are long term investments, you know, ten years, 252 00:14:19,600 --> 00:14:23,160 Speaker 1: if not indefinitely, and they're highly diversified. You just need 253 00:14:23,200 --> 00:14:25,560 Speaker 1: to jump online and look up all these different listed 254 00:14:25,600 --> 00:14:28,600 Speaker 1: investment companies and you'll see the you know, eighty to 255 00:14:28,640 --> 00:14:31,360 Speaker 1: two hundred to five hundred different companies they invest in, 256 00:14:31,440 --> 00:14:36,040 Speaker 1: and they're predominantly income generating investments. And depending on the 257 00:14:36,160 --> 00:14:39,040 Speaker 1: underlying listed investment company that you pick, you know, if 258 00:14:39,080 --> 00:14:43,320 Speaker 1: they're investing in Australian industrial shares, they come with franking credits. Now, 259 00:14:43,360 --> 00:14:46,560 Speaker 1: the benefit of those franking credits for me in using 260 00:14:46,600 --> 00:14:50,840 Speaker 1: this tax structure is it can help reduce the impact 261 00:14:50,960 --> 00:14:55,240 Speaker 1: of tax on the income because franking credits obviously can 262 00:14:55,280 --> 00:14:59,080 Speaker 1: be helped to offset the income tax payable on the 263 00:14:59,120 --> 00:15:04,040 Speaker 1: dividends paid from my children's individual investment portfolios. Now, on 264 00:15:04,080 --> 00:15:06,680 Speaker 1: that note of dividends, I also want to point out 265 00:15:07,120 --> 00:15:13,000 Speaker 1: all of my children's dividends are automatically reinvested. I don't 266 00:15:13,040 --> 00:15:16,600 Speaker 1: have the dividends paid to any savings accounts or bank 267 00:15:16,600 --> 00:15:18,800 Speaker 1: accounts because I know if that money goes in it 268 00:15:19,000 --> 00:15:20,480 Speaker 1: just is one more thing for me to have to 269 00:15:20,560 --> 00:15:23,080 Speaker 1: track and monitor and separate before I accidentally go and 270 00:15:23,120 --> 00:15:26,120 Speaker 1: spend it. So for me, I love an automatic dividend 271 00:15:26,200 --> 00:15:30,000 Speaker 1: reinvestment plan because I don't pay brokerage. It's the money 272 00:15:30,080 --> 00:15:32,320 Speaker 1: is not even in my account, so there's no temptation 273 00:15:32,440 --> 00:15:34,000 Speaker 1: to spend it. Not that I would be tempted, but 274 00:15:34,000 --> 00:15:35,920 Speaker 1: it's more like I said, for an accident to not 275 00:15:35,920 --> 00:15:39,200 Speaker 1: noticing it's been paid, or noticing it's been paid after 276 00:15:39,240 --> 00:15:41,880 Speaker 1: I've spent it, which is sometimes slow at opening up 277 00:15:41,920 --> 00:15:46,080 Speaker 1: emails or mail. And it obviously helps the impact of 278 00:15:46,200 --> 00:15:50,120 Speaker 1: long term compounding interest. My children's portfolios are working for 279 00:15:50,200 --> 00:15:53,600 Speaker 1: them as they obviously don't need that particular income. So 280 00:15:54,000 --> 00:15:56,480 Speaker 1: for me, this is something I really recommend. And this 281 00:15:56,560 --> 00:15:58,640 Speaker 1: is one of the great things about a listed investment companies. 282 00:15:58,680 --> 00:16:01,400 Speaker 1: It's diversified. So if I was doing this with an 283 00:16:01,440 --> 00:16:04,440 Speaker 1: individual share such as a banking stock, you know, and 284 00:16:04,520 --> 00:16:08,000 Speaker 1: I have a dividend reinvestment plan, it means the dividends 285 00:16:08,080 --> 00:16:10,160 Speaker 1: depending on how they're paid, how much are paid, how 286 00:16:10,240 --> 00:16:12,520 Speaker 1: much we invest, it could mean that the portfolio has 287 00:16:12,560 --> 00:16:16,440 Speaker 1: an imbalance towards for example, the banking sector. Listed investment 288 00:16:16,480 --> 00:16:20,920 Speaker 1: companies is diversified, so it keeps that portfolio nicely spread, 289 00:16:20,920 --> 00:16:23,640 Speaker 1: which really appeals to me, particularly as I'm time poor. 290 00:16:24,600 --> 00:16:26,800 Speaker 1: I should also say is I've got separate holdings for 291 00:16:26,840 --> 00:16:29,480 Speaker 1: each child, so I can see when I log into 292 00:16:29,480 --> 00:16:34,240 Speaker 1: my children's investment portfolios, it's really clear, and it's really trackable, 293 00:16:34,800 --> 00:16:38,360 Speaker 1: and everything I've done is being done with intention. And 294 00:16:38,640 --> 00:16:41,800 Speaker 1: previously I shared a podcast about some of my aspirations 295 00:16:41,800 --> 00:16:44,760 Speaker 1: to my kids' portfolios, where I was going to invest 296 00:16:44,800 --> 00:16:47,160 Speaker 1: a lot more, but with all the interest rate rises 297 00:16:47,280 --> 00:16:50,480 Speaker 1: and the cost of living crisis, I just have stuck 298 00:16:50,520 --> 00:16:53,320 Speaker 1: to my original game plan, which is, you know, one 299 00:16:53,320 --> 00:16:57,480 Speaker 1: thousand dollars each year when it's their birthday. Now, when 300 00:16:57,480 --> 00:17:00,920 Speaker 1: they hit age eighteen, which will obviously be at different 301 00:17:00,920 --> 00:17:05,680 Speaker 1: points in time with moving economic conditions, they will each 302 00:17:05,960 --> 00:17:09,720 Speaker 1: get their investment portfolio. But the benefit of this is 303 00:17:09,720 --> 00:17:12,920 Speaker 1: is they've had an investment portfolio that has been building 304 00:17:13,080 --> 00:17:18,600 Speaker 1: and growing over an eighteen year period. Now, my hope 305 00:17:18,640 --> 00:17:21,520 Speaker 1: for this money is that they don't actually sell the portfolio, 306 00:17:22,280 --> 00:17:25,600 Speaker 1: but instead they understand the concept and the power of 307 00:17:25,760 --> 00:17:29,159 Speaker 1: passive income and the freedom, time and choice that it 308 00:17:29,240 --> 00:17:34,320 Speaker 1: gives them. My hope is that through my inspiration, education 309 00:17:34,560 --> 00:17:38,919 Speaker 1: and empowerment, my children take over that portfolio and that 310 00:17:39,000 --> 00:17:44,560 Speaker 1: they start their own regular investment plan for this particular portfolio, 311 00:17:44,560 --> 00:17:47,760 Speaker 1: so they continue on building it after all the work 312 00:17:47,800 --> 00:17:51,080 Speaker 1: I've done for them over the last eighteen years. But 313 00:17:51,160 --> 00:17:53,720 Speaker 1: I have to accept the fact that that may not 314 00:17:53,840 --> 00:17:56,199 Speaker 1: be their choice or their goals, and I will have 315 00:17:56,359 --> 00:17:58,639 Speaker 1: to which won't be easy to do. I'll have to 316 00:17:58,760 --> 00:18:03,080 Speaker 1: respect that, because that is, of course what unconditional love is. 317 00:18:04,000 --> 00:18:05,920 Speaker 1: So as I wrap up, I just want to say 318 00:18:06,000 --> 00:18:08,840 Speaker 1: to this particular mother, like, whichever option you choose, the 319 00:18:08,880 --> 00:18:12,159 Speaker 1: most important thing is that you actually taken action and 320 00:18:12,280 --> 00:18:16,240 Speaker 1: not let those funds be eaten away with infation and tax, 321 00:18:16,320 --> 00:18:19,600 Speaker 1: which you know sounds like it potentially has been if 322 00:18:19,600 --> 00:18:22,159 Speaker 1: it's been sitting in a savings account. Now, I don't 323 00:18:22,200 --> 00:18:25,720 Speaker 1: say that to scare you or to pressure you to 324 00:18:25,760 --> 00:18:27,399 Speaker 1: do something with that money. I just want to simply 325 00:18:27,400 --> 00:18:29,920 Speaker 1: make you aware of it, because we obviously have been 326 00:18:30,080 --> 00:18:34,119 Speaker 1: in you know, inflation has been a serious problem for 327 00:18:34,200 --> 00:18:35,800 Speaker 1: so many people, and we don't want to see that 328 00:18:35,840 --> 00:18:37,280 Speaker 1: money e road away. And you don't want to have 329 00:18:37,880 --> 00:18:41,240 Speaker 1: obviously any regrets, particularly as your father gave you this 330 00:18:41,359 --> 00:18:47,160 Speaker 1: money for your three boys financial future, and as I've 331 00:18:47,200 --> 00:18:50,679 Speaker 1: said before, that income or that interesting you're earning from 332 00:18:50,720 --> 00:18:54,120 Speaker 1: that savings account that's taxable, as you know, So by 333 00:18:54,280 --> 00:18:57,480 Speaker 1: investing this money for them, you're not just honoring the 334 00:18:57,520 --> 00:19:00,720 Speaker 1: gift of their grandfather, You're actually giving your children a 335 00:19:00,880 --> 00:19:05,480 Speaker 1: huge headstart in life. And this is a foundation for 336 00:19:05,920 --> 00:19:09,320 Speaker 1: financial empowerment and starting to build their own passive income 337 00:19:09,359 --> 00:19:13,760 Speaker 1: for them, which can continue on building should they wish, 338 00:19:13,880 --> 00:19:17,280 Speaker 1: just like I wish from my three children too. So 339 00:19:17,480 --> 00:19:20,399 Speaker 1: I'm really excited for you to actually get started, and 340 00:19:20,440 --> 00:19:22,679 Speaker 1: I really hope that what I've explained to you the 341 00:19:22,720 --> 00:19:25,040 Speaker 1: three different options, you can now see with a little 342 00:19:25,040 --> 00:19:27,920 Speaker 1: bit more clarity as to what actually might be right 343 00:19:28,000 --> 00:19:30,240 Speaker 1: for you and what you want to go and get 344 00:19:30,280 --> 00:19:35,199 Speaker 1: some personal advice on. Now, if this episode has helped you, 345 00:19:35,680 --> 00:19:38,600 Speaker 1: or you know someone who needs to hear this or 346 00:19:38,680 --> 00:19:40,959 Speaker 1: would benefit from paring this, can you please send this 347 00:19:41,000 --> 00:19:44,679 Speaker 1: episode directly to them right now. And of course, if 348 00:19:44,720 --> 00:19:48,000 Speaker 1: you have any questions that are burning away for you 349 00:19:48,080 --> 00:19:50,760 Speaker 1: right now about helping you get started or helping you 350 00:19:50,800 --> 00:19:54,800 Speaker 1: maybe even break through a new threshold, I would absolutely 351 00:19:55,000 --> 00:19:57,680 Speaker 1: love to hear from you, so please send me through 352 00:19:58,280 --> 00:20:03,360 Speaker 1: your questions on Instagram, through your dms, and for everyone 353 00:20:03,359 --> 00:20:05,959 Speaker 1: else who's listening, please know that you are not alone. 354 00:20:06,280 --> 00:20:09,879 Speaker 1: Every time you do something very small, something very simple, 355 00:20:10,000 --> 00:20:14,960 Speaker 1: it takes you one step closer to having greater financial clarity, confidence, 356 00:20:15,119 --> 00:20:18,880 Speaker 1: and peace of mind for your financial future. All right, 357 00:20:19,560 --> 00:20:22,840 Speaker 1: thank you everyone for listening, have a fantastic weekend, and 358 00:20:22,920 --> 00:20:26,359 Speaker 1: I look forward to sharing my next episode of Start 359 00:20:26,400 --> 00:20:30,199 Speaker 1: Here next Friday morning at five am. Chow forin Now.