About 270,000 Australian children under the age of 12 invest in stock trading, cryptocurrency or standard savings accounts.
New research in the Finder Parental Report 2021, who surveyed over 1,000 parents of Australian children under 12, found that 7% of Australian children have a stock trading account in their name and 2% have a cryptocurrency account in their name .
Finder’s survey also found that more than half of children under 12 (58 percent) have a savings account.
Investment expert Kylie Purcell says the numbers reflect a trend more parents are teaching their children the concepts of wealth.
“Financial literacy is often something we don’t learn until we finish school,” Purcell said.
“While teaching children about saving and budgeting is essential, the concept of investing is also important.
“Starting an investment fund early on is a great way to teach your kids the concepts of wealth accumulation and compound returns over time. “
She said parents open accounts for their children to hold their investments.
Regulations say Australians must be 18 or older to buy and sell shares, but parents can open minor accounts in their child’s name.
But Purcell says it can come at an additional cost.
“As a general rule, for tax reasons, it is not a good idea to hold investments directly on behalf of a child under the age of 18,” she said.
“They can only earn $ 416 per tax year tax free. Once you cross this threshold, you can be hit with high tax rates of up to 66%.
“The tax implications of investing for your children are complicated. When in doubt, a conversation with an accountant could save you a lot of grief.
- 58 percent of children have a savings account
- 7 percent of children have a stock trading account
- 6% of children have a debit card
- 2% of children have a credit card
- 2% of children have a cryptocurrency trading account
- 37 percent of children have none of the above
Purcell urges parents to take the opportunity to oversee their children’s investment while educating them on concepts of wealth, such as investing.
“Take the opportunity to educate them on the importance of not putting all your eggs in one basket, but rather spreading their money across different funds and businesses.
“If you are investing small amounts of money, microinvestment apps like Raiz are ideal because you won’t have to face large brokerage fees and you can let your child invest their pocket money.
“If you are looking for a full stock trading account, SelfWealth is a fantastic option to consider. It recently won the Australian Share Trading Account’s first prize at the Finder’s Investment Awards 2021. ”
Tips for buying stocks
Finder shared six steps for buying stocks:
- Choose an online equity trading platform: Be sure to compare your options to find the one that best suits your needs.
- Sign up for an account: You must be over 18 and a resident of Australia to register.
- Plan before you buy: Determine how much you can afford to invest and how long you will hold the stocks.
- Choose your shares: Do you want to buy Australian stocks, global stocks, dividend paying stocks or penny stocks?
- Order your stocks: Search for the company name or ticker code and set a market order or buy limit order.
- Pay for your actions: Make sure you have enough funds in your account before the settlement date.
Hold the phone
The new research comes after Finder revealed that around a third of 12-year-old Australians had their own smartphones and were on average seven and a half years old when they first received a phone.
The statistics come from Finder’s recent survey of parents, which revealed a decreasing age at which children get their first smartphone.
The survey surveyed 1,033 parents and encouraged the use of prepaid phone plans so that spending doesn’t get out of hand.