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  1. Post
    #1

    Baby given $1000...what would you do with it?

    Hi guys,

    Our baby was given $1000 and Id like to do something a bit better than sticking it in a bank account. Whatever I do I want to leave it doing its thing for years. I feel like $1000 isnt much for investing, but thought id ask on here anyway.

    Wife was keen on bonus bonds, but I feel they are no better than a bank account.

    Thanks

  2. Post
    #2
    1) How much risk do you want
    2) How passive do you want this to be

  3. Post
    #3
    I would strongly ignore your wife's suggestion. Pay off debt first or put towards child related expenses.

  4. Post
    #4
    But it's specifically for the kid.

  5. Post
    #5
    you'd probably make more in 6 months in bonus bonds then interest from the bank. But then thats the extent of my financial investment knowledge, so thats all I've got

  6. Post
    #6
    sharsies kids account

    some S&P 500
    some NZX 50

    done.

  7. Post
    #7
    bradc wrote:
    1) How much risk do you want
    2) How passive do you want this to be
    I dont imagine it making a huge amount of money, just want it to do better than a bank account. I dont want to have to change anything / muck around with it, as I know too little and am too busy really.

    If I go some S&P 500 and some NZX 50, do I specifically have to choose the stocks / companies to invest in, or can I just chuck $500 on a fund in each?


    We have no debt (just a mortgage) but yup this is specifically for the child. Just something to get him started / he can get given when he turns 21.

  8. Post
    #8
    B|ind-Reaper* wrote:
    you'd probably make more in 6 months in bonus bonds then interest from the bank. But then thats the extent of my financial investment knowledge, so thats all I've got
    Im anti them after having 30 years of bonus bonds...and when I withdrew I got back the same amount that was put in at the start haha.

  9. Post
    #9
    If a thousand dollars isn't a lot to you, buy Bitcoin!

    I absolutely abhor cryptocurrencies and believe they're a massive scam but that would be an exciting experiment.

    If a thousand dollars is a lot to you, don't do this.

    They'll either be worthless in 20 years (likely) or he'll control 99% of the world's money. Possibly even both within days of each other.

  10. Post
    #10
    Equity wrote:

    If I go some S&P 500 and some NZX 50, do I specifically have to choose the stocks / companies to invest in, or can I just chuck $500 on a fund in each?
    .
    No, they are index funds, so they are just a mix of the top 500 US companies and the top 50 NZ companies.
    You don't need to pick the stocks thats allready done for you.

  11. Post
    #11
    stacrafty wrote:
    No, they are index funds, so they are just a mix of the top 500 US companies and the top 50 NZ companies.
    You don't need to pick the stocks thats allready done for you.
    Wicked - appreciate the info. I think thats exactly what I want. I think ill just put it under my name and save the extra subscription fees. Its also given me the option of adding to it.

    Hopefully no big companies go bust over the 20 or so years we invest and hopefully sharsies stays around in that time

  12. Post
    #12
    B|ind-Reaper* wrote:
    you'd probably make more in 6 months in bonus bonds then interest from the bank. But then thats the extent of my financial investment knowledge, so thats all I've got
    Not true.

    Build a spreadsheet using the compounding formula (Amount = Principal * (1+ interest rate in decimal)^( number of years ). and compared it to your actual bonus bond yield.

    I have $500 in bonus bonds since 2006 just for the lulz (in case I ever get the $1 million draw... hah). If I had chucked that into a savings account with 2.5% interest for 13 years, that would be $690 now. I have only won the $20 price like 5 times.

    If I had chucked that $500 into S&P 500 since 2006, on the 10% average annual return basis, that $500 would be $1726 now. (Before tax and fees etc. of course)

    Only play bonus bonds just for laughs or as a halfway house between playing lotto vs investment. It's *not* a good investment platform at all.
    Drives like an Asian till he gets behind the wheel of a holden

  13. Post
    #13
    Equity wrote:
    Wicked - appreciate the info. I think thats exactly what I want. I think ill just put it under my name and save the extra subscription fees. Its also given me the option of adding to it.

    Hopefully no big companies go bust over the 20 or so years we invest and hopefully sharsies stays around in that time
    There's no doubt that many of those companies will go bust in the next 20 years. The good part of the index fund is that you're less exposed than buying shares in single companies; one company is a fraction of the index fund's holding.

  14. Post
    #14
    Equity wrote:
    Im anti them after having 30 years of bonus bonds...and when I withdrew I got back the same amount that was put in at the start haha.
    Thats how its supposed to work. I had them for about 20 years, only ever "won" $20 once. They're kinda lame.

    I concur with getting shares. But for just $1000 I'd stick with a single investment. Not enough to be worth diversifying, imo.

  15. Post
    #15
    Related note: how do Bonus Bonds get around the gambling laws? Theres exceptions for the racing board and lotteries commission, but I didn't see one for ANZ.

  16. Post
    #16
    teelo7 wrote:
    Related note: how do Bonus Bonds get around the gambling laws? Theres exceptions for the racing board and lotteries commission, but I didn't see one for ANZ.
    There's specific legislation around unit trusts and in the finance act regarding bonus bonds.

  17. Post
    #17
    Put it in the bank, in an award saver and add $20 a week.

    We have put all our child's gifts away in a bank account and add $55/ week to it, she is 2 and has over $10,000 in the bank. This will be used for her schooling, and if there is anything left her first car, then when she is 21 she gets our rental property.

    BTW Bonus Bonds are basically a scam.

  18. Post
    #18
    dickytim wrote:
    We have put all our child's gifts away in a bank account and add $55/ week to it, she is 2 and has over $10,000 in the bank.
    That's pretty generous - we're doing a dollar a day, she's just turned 2 and is sitting on about $2400.

  19. Post
    #19
    I dont think well be able to afford anything like that! Will probably put a small amount away a fortnight. But we are going to split between buying more shares and just depositing into his bank account.

  20. Post
    #20
    What about kiwisaver?

    Assssssssuming you are still able to pull money out for your first home when she's an adult...

  21. Post
    #21
    one_red_god wrote:
    What about kiwisaver?

    Assssssssuming you are still able to pull money out for your first home when she's an adult...
    iirc theres a minimum age for kiwisaver?

  22. Post
    #22
    Thinking about this further, and all the people I've known through life, I think you're actually best served giving your kids nothing and letting them fend for themselves.

    So spend the grand on hookers and blow.

  23. Post
    #23
    Your odds of winning a prize
    For most prize draws over the next year, we expect that the chance of any Bonus Bond winning a prize will range between 1 in 25,000 to 1 in 50,000. The governing document requires us to manage the prize pool so that your chances of winning a prize are no better than 1 in 9,600.

    ANZ also charge higher management fees on it than what they do on any kiwisaver portfolio they manage.

  24. Post
    #24
    bradc wrote:
    Thinking about this further, and all the people I've known through life, I think you're actually best served giving your kids nothing and letting them fend for themselves.

    So spend the grand on hookers and blow.
    Interest free loan they pay back for their first car...
    Uni stuff...
    They wont be thinking of it as a hand out haha

  25. Post
    #25
    They'll be thinking it wasn't enough.