How to Invest for Your Kids in Australia: A Financial Advisor's Guide for Mums

By Molly Benjamin, Founder of Ladies Finance Club

Listen to the full podcast here.

There's a particular kind of mum guilt that doesn't get talked about enough: the nagging feeling that you should be doing something with money for your kids, but having absolutely no idea where to start. The cost of living is relentless, the to-do list is already impossible, and the world of investing can feel like a language you were never taught to speak.

In this episode of Get Rich, guest host Brionny Benjamin, auntie extraordinaire and mum to a two-year-old and a one-year-old, sits down with financial advisor Daisy Magill from Everest Wealth Management to cut through the complexity. What follows is one of the most practical, warm and genuinely useful conversations about building a financial head start for your children, even if you're working with a tight budget and a chaotic schedule. Whether you've got $500 ready to go or you're still just in the "I really should do something about this" phase, this one's for you.

Is It Even Worth Starting When Money Is Already Tight?

The short answer, according to Daisy, is a resounding yes — and the reason comes down to one of the most powerful forces in investing: compounding. When you invest even a small amount consistently over a long period of time, your returns start generating their own returns, which generate more returns, and so on. The earlier you start, the longer that snowball has to roll.

To make it concrete: if you invest just $100 a month from the day your child is born, at a conservative historical return of around 7–8% per annum, you could be looking at $45,000 to $50,000 by the time they turn 18. Roughly half of that would be pure portfolio growth on top of what you actually contributed. For an 18-year-old heading into adulthood, that kind of savings foundation is genuinely life-changing — whether it goes toward university, a first rental deposit, or the beginning of their own investment journey.

People start with as little as $20 a month. The amount matters far less than the habit and the time horizon. Investing for your children is almost always a long-term play, which means the window for compounding to work its magic is generously wide.

Do You Need a Goal Before You Start?

One of the most reassuring things Daisy says in this episode is that you don't need a specific destination in mind before you take the first step. Yes, having a goal helps, it shapes which structures and platforms make the most sense but even something as broad as "I want to give my child something meaningful when they turn 21" is enough to start.

Most parents of young children genuinely don't know yet what their kids will do with their lives, let alone whether they'll need private school fees, university support, or a housing deposit. And that's completely fine. The wealth you're building is flexible, what matters is that you're building it at all, rather than waiting for the perfect plan before you begin.

Should You Pay Down Debt First, or Invest Alongside It?

This is one of the most common questions parents ask, and the answer is more nuanced than a simple either/or. Daisy recommends a hybrid approach for most people: making slightly accelerated repayments on your mortgage while also putting something aside for the kids. The logic is straightforward — mortgage rates are sitting around 5%, while long-term share market returns have historically been closer to 7–8%. You're not necessarily better off delaying investing until the debt is gone.

As for HECS debt, Daisy's current advice is clear: don't prioritise paying it off faster. Since the changes to how HECS is indexed, it's now the cheapest form of debt available in Australia. Let it come out of your salary and wages as normal, and put your surplus energy into building your children's portfolio instead.

The Main Options for Investing for Your Kids in Australia

Daisy walks through several different approaches, each with different levels of complexity, tax treatment, and long-term outcomes. Understanding the landscape here is genuinely useful before you commit to a structure.

The simplest starting point is a savings account in your child's name. With interest rates where they currently are, it's not a bad option if you want something ultra low-maintenance. But the returns won't match what's possible over the long term through shares or ETFs, and it won't benefit from the compounding growth that makes early investing so powerful.

A more popular approach is to invest through a brokerage account in a parent's name — say, through a platform like Vanguard or Sharesies, with the intention of gifting it to your child when the time feels right. You maintain control, you pay tax at your own marginal tax rate, and when you eventually transfer ownership, that transfer is treated as a sale for capital gains tax purposes. It's relatively straightforward, especially for parents who don't want extra tax paperwork.

Minor investment accounts, set up directly in the child's name, have been growing in popularity, but come with some important catches that Daisy is keen to flag (more on that in the tax section below). And then there are investment bonds and education bonds, which can be a genuinely tax-effective structure for medium-to-high income earners, and family trusts for those investing larger sums over the long term.

Why ETFs Are the Starting Point for Almost Every Parent

Daisy recommends ETFs, exchange traded funds, to roughly 99% of her clients, and for good reason. The analogy she uses is a box of favourites: rather than handpicking individual chocolate bars from the grocery store, you get one box that already contains a curated mix. An ETF bundles a whole collection of assets into a single product you can buy on the share market, just like you'd buy shares in an individual company.

The diversification benefit is significant. If you put half your money in Apple and half in Woolworths and Woolworths drops 20% on a bad earnings result, your portfolio takes a 10% hit overnight. Within a well-diversified ETF, that same Woolworths drop is cushioned by the rest of the portfolio, something else might be up 30% on the same day, and your overall returns stay far more stable. For parents who don't have the time or inclination to research individual stocks, ETFs do the rebalancing and maintenance automatically.

Daisy's recommendation for parents is to look for a single, broadly diversified, low-cost ETF that covers both Australian and global markets. Australia represents only about 3% of the world's economy, so limiting yourself to ASX-focused ETFs means leaving a huge amount of global growth potential on the table. Tickers like VDHG and DHHF are worth researching as starting points, though the key principle is: don't go fancy. Pick one, keep it broad, and stay consistent.

ASX Shares vs Global Funds: What's the Difference?

One genuinely interesting insight from Daisy is just how dividend-obsessed Australia is compared to the rest of the world. Dividends, the portion of a company's profit paid out directly to shareholders, are practically a cultural institution here. Australian companies pay them regularly, and many investors structure their entire portfolios around capturing those dividend payments and their associated franking credits, a tax offset system unique to Australia that can significantly boost after-tax returns for eligible investors.

In contrast, most global companies, particularly in the US, rarely pay dividends at all. They reinvest profits back into the business, which tends to drive faster capital growth over time. So while Australian shares offer more income via regular dividend distributions, global shares typically offer stronger long-term growth in the portfolio's value itself. For parents investing over 18-plus years, Daisy recommends a mix of both, giving you stability and income on one side and growth potential on the other.

The Tax Rules Every Investing Parent Needs to Understand

This is where things get genuinely important and where a lot of well-intentioned parents trip up. Daisy is refreshingly clear about the risks of investing in a minor's name without fully understanding the tax implications.

When you invest in a child's name, the minor tax rates apply. Children under 18 can receive up to $416 in investment income completely tax-free but anything above that threshold is taxed at the top marginal tax rate. That's not a typo. The ATO's rules around what's called "non-excepted income" which includes dividends, capital gains, and even interest on a savings account are deliberately punitive above $416, specifically to prevent parents from using their children's names as a tax shelter.

It's also worth noting that reinvested dividends still count as taxable income in the year they're received, even if you never see that cash in your hand. So a minor account can quietly cross the $416 threshold without parents realising, triggering a tax liability they weren't expecting. There's also the admin reality: investing in a child's name requires setting up a tax file number for them and lodging a tax return every year. For many parents, that added complexity simply isn't worth it.

Investing in your own name is simpler, you pay tax at your adult marginal rate, there's no separate tax return, and when you eventually transfer the portfolio to your child, you'll pay capital gains tax on the growth at that point. If you've held the assets for more than 12 months, the 50% CGT discount applies, so you'll only be taxed on half the capital gain. Not perfect, but manageable and well-understood.

Investment Bonds: The 10-Year Rule Explained

Investment bonds and education bonds are probably the most misunderstood vehicle in this space, but for the right people they're genuinely compelling. Here's how they work: you invest money into a bond structure, providers include Generation Life, Australian Unity, and AMP where the tax is managed inside the bond itself at a maximum rate of 30%. For medium-to-high income earners whose marginal tax rate sits above 30%, this is immediately advantageous.

The headline benefit comes from the 10-year rule. If you hold the bond for at least 10 years without withdrawing, you can then take the money out completely free of capital gains tax — even if the portfolio has grown five or ten times over. For parents who start investing when their child is young and plan to access the funds when they're 18, 20, or 21, the timing often lines up naturally.

There is one important structural rule to be aware of: in any year you contribute to the bond, you cannot exceed 125% of the amount you put in the previous year. If you skip a year of contributions entirely, you lose the ability to add more to that bond, you'd need to open a second one and start the 10-year clock again. Daisy generally recommends waiting until parents are done having children and confident in their surplus cash flow before setting one up.

And despite the name, the money in an education bond doesn't have to be used for education. There are different tax implications if you use an investment bond for non-education purposes, which is why Daisy typically recommends the investment bond structure for greater flexibility.

Superannuation and Teenagers: Starting the Conversation Early

You can't open a super fund for a child under 14, but Daisy is passionate about starting the conversation as early as possible. Superannuation is still the most tax-effective investment structure available in Australia, contributions are taxed at just 15%, earnings within the fund are low-tax, and retirement withdrawals are tax-free after 60. The problem is that most young Australians land their first job, tick a random box on a super form, and don't think about it again for years.

When Daisy's nephew got his first job, he called her to ask which fund to choose. She sat down with him, walked him through what his investment option actually meant, and made sure he was in a low-cost fund with a growth-oriented strategy appropriate for his age. That kind of early financial literacy knowing what you're in, why, and what it's doing is something most adults never get, let alone teenagers.

For parents, the lesson is clear: as your children start earning income, make superannuation part of the conversation. Check that their fund has low fees, a sensible investment strategy, and isn't quietly eating their balance in insurance premiums they never agreed to. It's a small investment of time that can be worth thousands over the decades ahead.

Micro Investing Apps: Fun and Engaging, But Check the Fine Print

Apps like Raiz and Spaceship have made investing genuinely accessible and, let's be honest, kind of enjoyable. Daisy appreciates them for exactly that reason — they're interactive, visually engaging, and for parents trying to get their kids interested in how money grows, the gamified experience can be a real asset. Watching your balance move in real time is motivating in a way that a static account statement simply isn't.

That said, she urges caution when investing larger amounts through these platforms. The ongoing administration fees can be relatively high compared to your balance — and unlike buying an ETF directly through a low-brokerage platform, where you're only paying a transaction cost at purchase, some micro apps charge a percentage of your balance on an ongoing basis. Daisy's practical tip: pull up the Product Disclosure Statement (the PDS), drop it into ChatGPT, and ask it to calculate what your ongoing fees would look like on your specific balance. It takes five minutes and could save you a meaningful amount over the long run.

Grandparents, Gifting, and What the ATO Actually Allows

The trend of early inheritance grandparents and relatives wanting to see their money make a difference while they're still around is growing, and Daisy is seeing it more and more in her practice. There's no gift tax in Australia, which is a pleasant surprise for many people. But there is one important caveat for anyone receiving an age pension or likely to in future.

Any gifts over $10,000 in a single year, or $30,000 across a rolling five-year period, will still be counted as an asset under Centrelink's age pension asset test even though the money is no longer in the giver's account. In other words, you can't move money into a grandchild's name and then quietly receive the full pension as if the savings never existed. It's a rule worth knowing before planning any large gifting strategy, and Daisy flags it proactively with her older clients.

You've Got $500. Here's Exactly What to Do.

Brionny asks the question many parents are quietly thinking: if I have $500 right now, what do I actually do with it? Daisy's answer is delightfully practical.

First, get clear on your intention. Investing in shares means accepting that you might not be able to touch this money for seven or more years. The share market is volatile in the short term, if you think you might need it back in 18 months, this isn't the right vehicle. But if you're genuinely investing for the long term? Perfect.

Next, choose a brokerage platform. Daisy suggests Googling low-brokerage share platforms and comparing options. Transaction costs have dropped dramatically in recent years, what used to cost $20 per trade can now be as low as $2 on some platforms. Look for usability, low brokerage fees, and ideally some automation features that allow you to set up regular contributions.

Then, pick one diversified ETF. Not five. Not a theme-based one. Not just Australian, not just global, something that covers the whole world in a single product. Keep the fees low and the diversification broad. If ethical investing matters to you (as it does for Brionny, who wants her portfolio to avoid coal and gas), search specifically for a low-cost diversified ethical ETF and read the fund's Ethical Charter before you invest. The word "ethical" can mean quite different things across different funds, and making sure the charter actually aligns with your values is worth the extra ten minutes.

The Gift You Can Give Right Now

Daisy grew up in a household where her parents talked openly about money and invested in the share market. She started putting money aside as soon as she got her first job, and 15 years later, she's genuinely grateful for that head start. But she's the first to acknowledge that not everyone had that and one of the most powerful things about this episode is the reminder that the cycle can start with you.

You don't need to have grown up with financial literacy to pass it on. You don't need a trust fund, a financial advisor on speed dial, or a hefty lump sum to begin. The clients Daisy is most passionate about helping are the ones who maybe didn't have that foundation themselves, and are determined that their kids will. Small, consistent amounts. A broad ETF. A platform with low brokerage. And the decision to start today rather than waiting for the perfect moment.

Because the returns on that kind of investing aren't just financial. They're generational.

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