Camille Van Vyve
06 Mar 2023
Invest when you are 1 year old: 18 years to build up a nice starting capital
Of course, you will not decide yourself to invest from an early age. But if you are a parent, ask yourself the question for your children! The “youth savings account”, in addition to having gone out of fashion, does not bring in anything… With an investment horizon of around twenty years, why not invest your children’s savings in shares?
Outsmart the squirrel
When it comes to investing, the first rule is to start early. Because over time, savings do not grow linearly like a squirrel, but exponentially through the magic of compound interest, which is also reinvested year after year. Investing for your child from an early age therefore means letting him benefit from this exponential growth as soon as possible, regardless of the size of the capital invested at the start.
Long horizon = greater risk tolerance
Similarly, by investing early for your child, the investment horizon he will benefit from will be long, since the money will not be released until he reaches majority. Eighteen or even fifteen years of investment horizon is godsend for an investor! This makes it possible to meet all the conditions necessary for an investment totally or almost totally in shares, and to expect a return of around 7% per year on average.
Objective: finance one’s studies, a first real estate purchase...
Later on, it will also be a question of making the future account holder responsible for the use that will be made of the amount made available to him and of emphasizing the importance of saving throughout his adult life. The sum accumulated can be used, for example, to finance higher education – why not abroad – or possibly to finance later a first real estate purchase.
Account blocked until 18 years old
A securities account can be opened in the name of a minor by a legal representative, generally a parent. The transferable securities placed on the account are considered as belonging to the minor; the legal representative undertakes to manage these assets as a good father and in the exclusive interest of the child. At 18, the child will freely dispose of the sums invested in his name.
Open an account in the name of or for your child?
If, as a parent or grandparent, you want to keep some control over these amounts, you can also choose to invest for your child without placing the money in his name (or opt for a combination of the two formulas). You will thus be able to dispose freely, and at any time, of the sums invested.
Read the other articles in the “Investing by age” series: investing in your 20s, investing in your 40s, investing in your 60s and investing in your 70s.