Where to invest our children's money?

One of the main goals of any person or family when thinking about building a savings account is to ensure the security of the next generation. We set goals for education, eventually even for a real estate investment, a car, or simply a value for the youngest to start their adult and professional life with greater stability.

In terms of investment, the offer was not always attractive and it is safe to mention that a large part of the savings aimed at minors are invested in term deposits or investment insurance with guaranteed capital.

• Will it make sense?
• Are we in fact contributing to a financial plan adjusted to the stipulated objectives?

These questions are even more important at a time when interest rates are low, inflation is high and traditional investment opportunities are becoming less and less attractive.

Therefore, the question in the title does not seek exactly one answer, but several. It's a kind of alert. In addition, although smaller accounts are already more adapted to the new reality and with investment opportunities similar to normal accounts, the truth is that we often look at these applications as a piggy bank and not as an investment plan.

It is not necessary to open an account in the name of the minor in order to invest, the truth is that this form of action makes it easier to share the values ​​that each one accumulates. Despite the apparent rationality of the decision, we must pay attention to the associated costs, limitations in terms of investment and to have the notion that it is not strictly necessary to open an account in the name of the minor to allocate a certain amount to him.

We usually tend to look at our children's money as our own. It shouldn't be like that.

Stipulating an investment plan also allows for this mandatory separation to achieve a more rational and less emotional investment.

At the time of celebrations and parties or through periodic or occasional contributions that we make, they are a great opportunity to reinforce the defined investment plan and even to rebalance according to the moment of the market. Given the characteristics of the investment, which is normally long-term and with punctual liquidity available, we can draw up a plan very early on that is not hampered by the daily variations of the market, nor by the economic situation. The plan must, indeed, be adjusted to the defined objectives, to the expected time for achieving them and to our capacity for savings and reinforcement.

There is often the idea that children's money has to be safe because it's for them. But attention, security doesn't mean leaving money idle. It means investing as rationally as possible and ensuring that this investment is adjusted or at least compensated for the inflation effect. As we mentioned in this article, put your money to work.

The problem is that our emotional and speculative perspective on investing makes it difficult to take the long-term view. The time we waste thinking about what will happen to the investment portfolio today or tomorrow is time wasted and without any return. Our focus should be on the time frame for the investment and the real savings objective and not on the daily bumps over which, in most cases, we have no control.

Gen Z, which is a fully digitally native generation, will have a very different approach to money and money itself will certainly be an evolving concept. However, the way of thinking, the need to guarantee security in the future, will not cease to exist. This generation will continue to want to buy the means of transport of the future, the most advanced gadget, a form of permanent housing, quality of life for travel and leisure, and a more independent future without monetary constraints for them and for future generations. Therefore, it is up to us to maintain the savings plan and look at our children's money as a way of guaranteeing their future experience and seizing opportunities. No strings attached.

The financial market is a mirror of the evolution of society in the last century. Also in terms of investment, the opportunities today are very different from the solutions that existed 40 or 50 years ago. Today, even in a financially repressive environment due to high existing debt, high inflation and weak prospects for economic growth, new solutions have emerged that will certainly make their way into the investment portfolios of the future:

• Crowdfunding and collaborative financing platforms (peer-to-peer);
• Cryptocurrencies and decentralized systems;
• Investment in real, intangible or tokenized digital assets (real estate, raw materials, works of art, copyrights, collectibles, royalties, shares in companies, shares, brands, among others).

Even the most traditional assets are now more flexible and cheaper, allowing a diversified and optimized allocation using RSP, and traditional bonds and shares, through direct investment or through investment funds or ETFs.

Environmental, social and ethical concerns, seeking sustainable and responsible investment, are now a certainty, enabling the emergence of optimized instruments and structures oriented towards the values ​​that we consider essential, both for us and for the next generations.

It is possible to build a portfolio that is tailored and aligned with the values ​​and preferences of the future, which allows us to keep an eye on the final objective and not on the daily return. For the next generations to think about their children's money, such as Generation Y (millennials) and Z (digital natives), for the success of the defined plan, the ability to save and patience will continue to be much more important than the daily variations of the investment portfolio. Even if the money is not ours. Even if it is the money of the children of this generation.

Finally, I leave 3 notes that I consider essential and that highlight the biggest investment secret, which is the time factor and which also applies to our children's money:

• Starting early pays off. We cannot be afraid of negative variations;
• The important thing is not trying to predict future market price movements, but the time we spend in the market, that is, the time horizon. Patience, the time factor, is the biggest secret to success in investing;
• The more time we invest and the greater our savings capacity, the more likely we are to have good results. The capitalization factor works in our favor.