Kid-vestors: Nearly 300,000 Aussie children are investing in the stock market
A rising number of Australian kids are being introduced to the world of investing, according to new research by Finder.
According to Finder's Parenting Report 2021, which surveyed 1,033 Aussie parents of children under 12, 7% of children – equivalent to 270,000 Australian kids – have a share trading account in their name.
The survey also found 2% of children under 12 have a cryptocurrency account in their name.
Kylie Purcell, investing expert at Finder, said it's never too early to introduce children to key wealth concepts like investing.
"Financial literacy is often something we don't learn until we've finished school. While it's essential to teach children about saving and budgeting, the concept of investing is also important.
"Starting an investing fund early on is a nice way to teach your children the concepts of wealth accumulation and compounding returns over time."
While you must be 18 or older to buy and sell shares, parents can open minor accounts under their child's name. This means shares and ETFs are owned by the child, but cannot be accessed until they're of age.
"Typically, for tax reasons, it's not a good idea to hold investments directly in the name of a child under the age of 18.
"They can only earn $416 per financial year tax-free. Once you exceed this you can be hit with hefty tax rates as high as 66%.
"The tax implications of investing for your kids are complicated. If in doubt, a chat to an accountant might save you a lot of heartache," Purcell said.
Purcell said parents must supervise their children's investing.
"Use the opportunity to educate them on the importance of not putting all your eggs in one basket, but instead spreading out their money over different funds and companies.
"If you're investing small amounts of money, micro-investing apps such as Raiz are great because you won't face large brokerage fees, and you can let your child invest their spare pocket money.
"If you're looking for an all-round share trading account, CMC Markets and SelfWealth are great options to consider. They recently won the top prizes for Best Overall Share Trading Platform and Australian Share Trading Account in Finder's Investment Awards 2021."
The Finder Investment Awards 2021 recognise the best Australian and international share trading platforms and accounts. The awards cover a number of categories for different investor levels, including the best Share Trading Platform for new investors.
Finder's survey found more than half of children under 12 (58%) have a savings account.
Children of millennial parents are more likely to have a share trading account (7%) or cryptocurrency account (2%) than those of gen X parents (5% and 1% respectively).
However, children of gen X parents are the most likely to have a savings account (66%), compared to those of gen Z parents (53%).
|Does your child have any of the following?||%|
|Share trading account||7%|
|Cryptocurrency trading account||2%|
|None of the above||37%|
|Source: Finder's Parenting Report 2021 of 1,033 parents of children under the age of 12|
Looking for an easy way to buy and sell shares? Check out the winners of the Finder Investment Awards 2021.