Like tennis stars and tech giants, Pearler says giving kids an investing head start pays dividends
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Move over mums and dads, as the student becomes the master with investing apps designed specifically to kickstart the investment journey of kids taking off.
Pearler is planning to launch an app specifically for kids Pearler Headstart, joining a move by several investing platforms and financial gurus looking to advance the financial skills of children from a young age.
Co-founder and CEO of investing app Pearler Nick Nicolaides told Stockhead with rapid adoption of the kids direct-shares accounts from its current users, the company saw an opportunity to offer a standalone app. Nicolaides said Pearler wanted to create something that would promote parents/kids using it together.
“It’s the sharing of knowledge between generations that is going to make most difference, rather than simply bringing costs down,” he said.
Pearler Headstart will enable micro investing and roundups and has two primary investment options. Nicolaides said the aim with design was ease and automation, making it simple to invest regularly whether for one or multiple children.
“The engagement is less on the P&L, instead we focus on life’s first financial milestones,” he said.
“We gamify the progress towards goals for say that gap year, first second-hand car or even a home deposit.”
While investing for kids is a great way to turbo-charge their piggy bank, there are considerations such as tax which need attending to. The traditional way to invest is one that enables parents/guardians to invest in ASX shares and ETFs on the child’s behalf.
“The direct shares approach has been the standard for some time, but it is less practical if you are keen to invest smaller amounts like an allowance weekly or monthly due to ASX costs and minimums,” Nicolaides said.
He said investing for kids these days is easier with direct-share trading costs coming down and multiple micro-investing options.
“Where there isn’t enough support is technology that not only enables investing on behalf of children, but that helps adults engage them in the learning process,” Nicolaides said.
Meanwhile, Raiz Invest has launched a new version of the Raiz Kids feature for its investing platform.
Among updated features is access to separate and unique investment portfolios, kids can directly access their account with a parental control function and recurring investments direct into Raiz Kids accounts.
Raiz Invest managing director and joint group CEO George Lucas said the kids feature was updated to provide greater financial independence and encourage involvement in savings and investments from an early age.
“Raiz kids can now have direct access to their own investment portfolio, with the parents’ permission which can be an immersive way to help your kids understand how financial markets works along with developing savings and investing habits that they can take with them into their adult lives,” Lucas said.
“If they give permission in the settings, their kids via Raiz Kids can choose their own portfolio or can make changes to recurring investments as an example.”
Online trading platform Superhero has a minor account for kids. After your little investor reaches 18, they can create a Superhero account with an off-market transfer of the assets from the minor account to their new adult account.
Pocket money app Spriggy also has an investment feature for kids focusing on ETFs. Much like superannuation there’s a choice between conservative, balanced and high growth options.
There’s also the choice to invest in specific markets, like top Aussie stocks or sectors like global tech.
Adults can also invest on behalf of kids with a special kids account on online investment advisor Stockspot. Stockspot founder and CEO Chris Brycki told Stockhead there are no management fees until their portfolio reaches $10,000 or they turn 18.
“Typically, these accounts are opened by a parent or grandparent who wants to invest on behalf of their offspring and they do so because the share market returns are generally higher than just leaving money in a low interest bank account,” he said.
“Also, with the closure of the CBA Dollarmite account in 2021 parents and grandparents were wanting the option of how to teach their children about investing and managing their money.
“Stockspot also provides personal advice for each client to ensure their portfolio is aligned with their investing goals and timeframe.”
And continuing the trend of teaching kids prudent financial skills from an early age, the Barefoot Investor Scott Pape is also writing a new book directly for kids, which is due out in November.
Nicolaides said kids have more time than any of us, but that doesn’t mean they should take massive risks when investing.
“Our entire business is built around what Warren Buffett has said at his AGM every year for over a decade – invest regularly in a low-cost index fund and hold,” he said.
“Then as kids grow, start discussing the idea of business and profits, then the idea of ownership of a business and dividends, then owning pieces of many businesses – the topic of stocks and prices probably shouldn’t come up for some time.”
Brycki said kids also have the benefit of time on their side when investing but will need reassurance stock markets fall periodically and their investment won’t go up all of the time.
“Stay invested, open the account with a long term view, track progress with your kids as it gives them something to work towards,” he said.
“Stock markets can also be a good lesson in resilience and teaching kids that like life, there will be good and bad times but hanging in for the long term has its rewards.
“Also, when share markets fall, think of it like a shopping sale. Your favourite item is selling for a discount and now would be a good time to buy.”
The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.