One of the most helpful pieces of advice regarding the share market is to let time do its thing. Businesses will grow and investment returns will compound in time.
Twenty years is an extremely long time in the investing world. If an investment was made today for a five year old, they could be twenty five and have a large portfolio before most of their peers have even started.
If I were to make three investments for my imaginary five year old, these are three I'd pick:
BETANASDAQ ETF UNITS (ASX: NDQ)
This index is made up of the largest technology businesses on the NASDAQ. These businesses used to be seen as risky, but now they are some of the most well-known companies in the world.
Some of its largest holdings include Apple, Facebook, Amazon, Alphabet (Google) and Microsoft. These businesses are some of the only global businesses that are still growing at a decent rate.
I'm sure all kids will use some, or most, of the businesses and it's nice to invest in what you know for beginners. It's also a great way to get them excited about shares when they're young.
Australian Foundation Investment Co. Ltd. (ASX: AFI) (AFIC)
AFIC is one of the simplest investments on the ASX. It invests in some of the largest blue chips in Australia such as Westpac Banking Corp (ASX: WBC), Telstra Corporation Ltd (ASX: TLS), Woolworths Limited (ASX: WOW) and Wesfarmers Ltd (ASX: WES).
It's been operating for nearly a century and it has been paying a solid dividend for many years too. The Australian stock market has been one of the best wealth creating assets in the world and it could keep creating reliable returns for shareholders and children for decades to come.
AFIC currently has a fully franked dividend yield of 4.07%.
Greencross Limited (ASX: GXL)
Greencross is the largest pet business in Australia and New Zealand with its Greencross vets and Petbarn retail stores.
Kids love animals and investing in Greencross would be very tangible for them. It also helps that Greencross is a good business with clever growth strategies and defensive earnings.
Greencross is trading at 14x FY18's estimated earnings with a fully franked dividend yield of 3.32%.
Foolish takeaway
I'd be pretty confident about buying all three of these stocks for my children and holding for the next decade.
At the current prices, I would invest in Greencross shares because it's trading cheaply and is still growing at a good pace.
