Investing in the kids’ future

Pick four big global themes, invest in them regularly – and don’t touch anything for 20 years

This month, I want to shift the focus from investing for ourselves to investing for our children. The topic is a little personal because I have been thinking about investing for my daughter, who just turned 10.

As parents, we get incredibly busy attending to the needs of our children in the here and now: things like quality and costly schooling and other lifestyle expenses.

What we often forget is the importance of maintaining a savings and investments fund for our children.

The purpose of such a fund is to be a genuine wealth builder. The children should not be allowed to touch the funds for the next 20 years and at that time they may use the funds to invest in real assets, not for consumption. Investors should follow the following fundamental guidelines:

1 The fund should be locked for 20 years (you can’t sell positions or take the money out).

2 Savings will be made into a brokerage account each month and investment purchases will be quarterly. (I will leave it to you to decide your annual investing goal, but I am thinking $10,000 a year.)

3 The fund will lock in four long-term themes and invest in them every three months.

4 Market timing and near-term economic forecasts are to be entirely ignored.

5 The fund will only invest in exchange traded funds (ETFs) as it’s the easiest way to get scale and diversification at low cost.

6 Don’t mess with it. You cannot sell existing positions.

7 You should review the strategies every five years and confirm the thesis for each theme.