Would you be happy with your children living the life you’re living right now? If you are, that’s great! Amazing! You’ve done it right, and now you’ve got to keep going. If you’re not, that’s okay because we’re going to work on those goals today. The number one indicator of whether you’ll be rich is if your parents are rich. Even if they’re not there yet, even if they’re still young, the decisions you make today are going to change your children’s lives. It starts with putting in your time, money, and effort. From there, it grows. Where you start is up to you; what they do with it is up to them. But let’s get right to it, shall we? Here are the 15 investments that will make your children rich:
1. Get Them a Credit Card as Soon as They’re Born
Whoa, whoa, whoa, wait a second. Okay, we know this one might give you a moment of pause, right? But hear us out. When your child is born, you could set them up as an authorized user on your credit card. They won’t use this credit card; in fact, you can shred it as soon as you get it. But since their name is attached to the card, when you make purchases and pay the bill off on time, you’ll also be building their credit score. So by the time they’re finished with school, they’ve already got a great credit record.
Now, you can also imagine that you have to be incredibly careful and responsible with this option because if you don’t pay those bills on time, you’re going to give them a bad credit score, which is one of the most damaging financial things you could ever do to your child. Be diligent, be careful, and they’ll be grateful.
2. Open an Education Investment Account
Educational investment accounts come with incentives like tax-free growth and often aren’t taxed when you withdraw from them for educational purposes, so they’re much more lucrative than a traditional investment account. In the US, the 529 College Saving Plans offer state tax deductions or credits for contributions. In Canada, the income earned from the Registered Education Savings Plans grows tax-deferred. When your child withdraws the money, it’s taxed according to their income, so they’ll pay little to no tax on it. Same thing in the UK: all gains on the Junior Individual Savings Accounts are tax-free, and so are the withdrawals.
Other countries in Europe, Africa, and Asia have similar benefits for educational investments. For many of these accounts, your child doesn’t even need to be born for you to start saving. You can open up the account in your name and then transfer it to theirs later on.
3. Open an Investment Custodial Account
Just like you can open up a credit card to set up your child for a good credit record, you can also open a custodial account to invest on their behalf. The education investment accounts we just spoke about are also custodial accounts, but they’re limited to paying for things related to your child’s education. There are other custodial accounts that handle asset management and even future retirement savings for your children, but we’re not talking about those right now. For this custodial investment account, we want to focus on a mixture of fun, education, and making money.
So what do your kids love when they’re young? Think Disney, video games, the toys they like, any gadgets or technology. These are all great investments; your kids are already ahead of the trend, so why not get them investing in them? You can use the custodial account to buy stocks in companies that align with your child’s interests. Adults can’t take the money for themselves, and children can’t take out the money until they’re 18 to 21 years old, so it’s protected. As your child’s hobbies and interests change when they get older, so will their investment choices. That money stays in their accounts until they’re old enough to understand how valuable their education has been. It’s a great way to teach your children about financial responsibility and make money for them at the same time.
4. Invest in Startups
Now, investing in startups is high-risk, but it’s also fun, and they have an extraordinary return in some cases. As your child gets older, it’s a journey you could go on together because they’ll have their finger on the pulse of the next big thing before you do. You can use websites like Seedrs, AngelList, or Crowdcube to look for opportunities to invest in early-stage companies. Crowdfunding platforms often have low minimum investments ranging from $100 to $1,000, and you could spread your investments across several startups. You purchase equity in early-stage companies that have high growth potential. If you invest in the right startups, they can grow exponentially. When these companies succeed, they may go public or be acquired, giving big financial returns to early investors, creating wealth for you and your children as these investments mature and yield returns.
5. Invest in Collectibles
Art, rare coins, vintage cars, model train sets—maybe they start off as little hobbies or fun quirks, but when you learn that you can channel that obsession into a profit, well, then the real fun begins. The phenomena of collective behavior and subculture appeal tell us that there are niche interests and markets with strong depth of commitment, and the people in these groups are willing to spend large amounts of money, not just as an investment but because they’re obsessed with it. This means you can turn it into an investment. With an obsession, a passion, or an appreciation for something, it doesn’t matter what the economic climate is; someone out there is always going to want to buy it. Cultural trends, rarity, and demand drive the value of collectibles; that’s why they’re considered safe haven assets. When we say diversify your portfolio to reduce financial risk, this is what we mean.
Okay, now we can’t all be collectible aficionados. We just don’t have the time or, honestly, the interest. So where do you start for this? Well, the most popular and lucrative type of collectible is the art sector. Rare pieces by well-known artists appreciate significantly over time, and the art market is known for its high-value transactions. You might have heard about icons like Picasso, Basquiat, and Banksy, but the idea that you could ever own a part of one of their works was just like a pipe dream, right? Except it isn’t, not when you’re working with the right asset management firm.
6. Invest in Property
Say you buy a one-bedroom apartment today in a growing urban area for $250,000. You give a $50,000 down payment and finance the other $200,000 through a mortgage with a 4% fixed interest rate. You pay about $955 a month. In 21 years, you hand that apartment over to your child. It’s now worth about $432,000. You’ve just handed them a small world on a big oyster, and from there, they can sell it and invest in other ways: buy a bigger property, invest in stocks, or fund their education or business ventures. They’ve got an opportunity to generate passive income through renting it out. They could use it as leverage to purchase other properties with a small down payment while financing the rest themselves. You could also diversify their investment portfolio and reduce their financial risk overall, giving them financial stability. It’s a tangible asset that offers them safety, security, and peace of mind, and that is the ultimate goal here, right?
7. Set Up a Trust Fund
Now, we’ve equated trust funds with the actions of the uber-wealthy, but you know it’s beneficial and accessible for everyone. With a trust fund, you protect assets from creditors, lawsuits, and even divorce settlements. You dictate how and when you want your assets to be distributed to your child, so you protect them from spending everything in one go as well. You also put assets in an irrevocable trust, which may not be subject to estate taxes, and the income generated by trust assets can be taxed at your child’s lower tax rate. The income a trust fund generates can give your child a steady income stream, so there’s some sort of financial stability. It’s such an important financial planning tool that anyone can and should access and use, not just the ultra-wealthy.
8. Put $50 Into a Compound Investment Account
Now, before you pay $50 for your next takeout dinner, wait a second. You can use that money to make your child a millionaire, or at the very least make a small contribution to teach them about the power of delayed gratification and compound interest. You start when your child is born because the power of compounding is greater the longer your investment period. You stay consistent because consistently adding to it enhances the compounding effect,
and you reinvest because reinvesting dividends or interest will allow your investment to grow at an accelerated rate. This teaches your child to grow their money through patience and discipline. Now, $50 might not be enough to make them a millionaire, but this is about growing their investment consistently over time and teaching them to do the same.
9. Get Them a Good Education
It sounds almost too obvious, right? But investing in a good education is the ultimate tool to secure your child’s future. This gives them the tools and skills they need to navigate the world, understand the importance of financial literacy, and leverage their earnings potential. This isn’t just about traditional education. Expose them to extracurricular activities, teach them skills like coding, languages, or financial literacy, encourage them to develop hobbies that can turn into profitable ventures, and ensure they’re well-rounded. Education opens doors to opportunities that otherwise might be closed. We’re talking about everything from job prospects to personal growth. Education is the number one key to better social and economic status.
10. Start a Business Together
Why would you want to go through all the stress of starting a business with your child? Because you’re setting them up for life. Teaching them the ins and outs of running a business teaches them entrepreneurship, financial responsibility, and hard work. It’s not about creating a mini version of you; it’s about giving them tools for success, skills, independence, and making their dreams come true. That financial and intellectual investment in your child’s education will have a positive, lasting effect for the rest of their life. This kind of investment isn’t just about money; it’s about you and them and the bond that you’ll always share.
11. Invest in High-Quality, Dividend-Paying Stocks
When you invest in high-quality, dividend-paying stocks, you teach your child that money can make money. This is because dividend-paying stocks give investors regular income through dividend payouts, and you reinvest those dividends to increase your child’s shareholding. This is how you give them capital appreciation over time. By the time your child is an adult, they’re not only going to have a stable portfolio but also understand how investments work and how they can grow their wealth through strategic, long-term investments. They will know that wealth is generated not just by hard work but by smart investments and the power of compounding interest.
12. Buy Them Gold or Other Precious Metals
Gold and other precious metals like silver, platinum, and palladium can act as a hedge against inflation and economic instability. They’re tangible assets with intrinsic value, unlike paper money. Gold and precious metals have maintained their value throughout history, so they’re a safe investment. You could buy physical gold, like coins or bars, or invest in exchange-traded funds (ETFs) that track the price of gold. When the time is right, your child can sell these assets for profit or use them as collateral to secure loans or make other investments.
13. Invest in a Life Insurance Policy
A life insurance policy is an essential part of financial planning, and it’s a way to ensure your child’s financial future is secure. You could set up a whole life insurance policy, which accumulates cash value over time. This type of policy offers both a death benefit and a savings component, so it provides financial protection and growth. The cash value can be accessed for your child’s education, buying a home, or starting a business. It’s a financial safety net that grows with them, providing peace of mind for their future.
14. Set Up a Health Savings Account (HSA)
A Health Savings Account (HSA) is a tax-advantaged savings account designed to help people save for medical expenses. Contributions to an HSA are tax-deductible, the funds grow tax-free, and withdrawals for qualified medical expenses are also tax-free. By setting up an HSA for your child, you’re ensuring they have a financial safety net for healthcare costs. This is especially important considering the rising cost of medical care. An HSA can help them manage unexpected medical expenses without financial strain.
15. Teach Them About Financial Literacy
The most important investment you can make in your child’s future is teaching them financial literacy. This means educating them about budgeting, saving, investing, and managing debt. When your child understands how to manage their finances, they’re more likely to make informed decisions that will benefit them in the long run. Financial literacy empowers them to build and maintain wealth, avoid financial pitfalls, and achieve their financial goals. Start early, be consistent, and lead by example. Show them how you manage your finances, involve them in financial discussions, and provide resources for learning. A financially literate child is well-equipped to navigate the complexities of the financial world and secure their financial future.
In conclusion, these investments are not just about money; they’re about providing your child with the tools, knowledge, and opportunities they need to succeed in life. It’s about creating a foundation for them to build upon, ensuring their financial security, and giving them the freedom to pursue their dreams. So start today, invest in your child’s future, and watch them grow into financially responsible, independent, and successful adults.