Is it a good idea to start up a KiwiSaver account for your kid?
It may seem a little early to think about KiwiSaver for kids, but setting one up for your child can be a valuable investment decision.
As a responsible parent, planning for your child’s future is undoubtedly one of your top priorities. One decision that can significantly benefit your child’s financial future is setting up a KiwiSaver account here in New Zealand from a young age. KiwiSaver is not just for adults planning their retirement. It’s a smart choice for kids and their long term financial wellbeing. Below are four reasons I recommend setting up a KiwiSaver for your child:
Financial Education for Children
KiwiSaver for kids provides an excellent way to teach your child about financial responsibility from an early age. By contributing to their KiwiSaver account, you instil the importance of saving and investing for the long term. Watching their savings grow can be a valuable lesson in delayed gratification and the benefits of compound interest, setting them on the path to financial success.
KiwiSaver accounts benefit from government contributions. Once your child turns 18, they may be eligible for the annual Government contributions and employer contributions. This means that, over time, your child’s KiwiSaver balance can grow significantly with the help of these contributions. This will be further strengthening their financial future.
Compound Interest Magic
KiwiSaver funds are typically invested in a diversified portfolio of assets. This is because these have the potential to earn higher returns over the long term compared to a standard savings account. By starting early and not jumping out quickly, your child has more time to ride out market fluctuations and benefit from the power of compounding, ultimately building a substantial nest egg for their future.
A Step Up for the Future
KiwiSaver funds are flexible and can be used for various purposes other than retirement, including buying a first home. In some instances, their savings can be accessed if they are moving overseas permanently. By setting up a KiwiSaver for kids, you provide them with financial options and security, enabling them to pursue their dreams and goals as they grow older.
KiwiSaver is a wise investment and a proactive choice here in New Zealand for your child’s future. It teaches them valuable financial skills, and allows them to benefit from government contributions. KiwiSaver also offers the potential for higher returns, and it provides flexibility for various life milestones. By starting early, you give your child a head start on the path to financial security. You’re also helping them towards a comfortable retirement, setting them up for success in the years to come.
If you need some advice on getting started and the best way to do it, get in touch here and we can help you out.