One of the most valuable investing lessons I have learned is to start early. Investing billionaires like Warren Buffett are made, often over many decades, and you can give your children the same advantage by setting them up from an early age with a carefully selected portfolio of their own.
There is no shortage of great companies to pick from on the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) and to get you started here are five defensive, growing companies to consider buying for your children as we head into 2015:
Healthcare stars:
In the hierarchy of human needs, health comes before almost everything else. Understanding this goes a long way to appreciating why healthcare spending will continue to boom in 2015 and into the next decade.
Although a lot of healthcare stocks are looking expensive relative to their current earnings, two companies that stand out for me are Mayne Pharma Group Ltd (ASX: MYX) and ResMed Inc. (CHESS) (ASX: RMD).
Pharmaceutical company Mayne Pharma is focused toward growth and its market presence in the big U.S. market is gaining traction with a pipeline of new branded and generic products.
Meanwhile, mask manufacturer ResMed will retain strong growth in the years to come, supported by global aging populations and blossoming healthcare demand in the Asia Pacific. The company is also more attractively priced than competitor Fisher & Paykel Healthcare Corp Ltd (ASX: FPH).
Insurance:
Travel insurance group Cover-More Group Ltd (ASX: CVO) has had a great year in 2014, beating prospectus earnings guidance and growing Net Profit After Tax (NPAT) by 14.1% to $25.1 million.
The result allowed the company to pay a special dividend and it is positioned for strong growth in the years to come with a focus on the rapidly growing China travel market.
Gaming growth:
With a strong plan for growth over the next five years SKYCITY Entertainment Group Limited-Ord (ASX: SKC) is a top pick for any portfolio. The company is investing hundreds of millions of dollars developing its monopoly Auckland and Adelaide casinos in exchange for regulatory changes allowing more machines and table games, all while paying a sustainable dividend.
Young stars:
Small-cap investment company Contango MicroCap Limited (ASX: CTN) offers exposure to a large number of high prospect, growing companies in one neat package. The company has an enviable reputation for growing returns, while paying a sizeable dividend of over 8%.
Adding to each of the positions each year will allow the returns to compound and set your children up for a bright start.
For investors wanting to give their children the best start, there is one other company I think every investor should buy today.
