One of the best things you can do for your children financially, aside from teaching them how to manage money, is to invest a little bit of money for them. Compounding can do incredible things over a period of 10 years – imagine how much $500 could grow with dividends re-invested for someone from the age of 1 to 21. However, you shouldn’t just invest in any share – it needs to be something that you can see achieving good returns for two decades such as these three: iShares S&P 500 ETF (ASX: IVV) The legendary investor Warren Buffett has…
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One of the best things you can do for your children financially, aside from teaching them how to manage money, is to invest a little bit of money for them.
Compounding can do incredible things over a period of 10 years – imagine how much $500 could grow with dividends re-invested for someone from the age of 1 to 21.
However, you shouldn’t just invest in any share – it needs to be something that you can see achieving good returns for two decades such as these three:
iShares S&P 500 ETF (ASX: IVV)
The legendary investor Warren Buffett has said that most (American) people should just invest in a S&P 500 fund and don’t do anything else. So, who am I to argue with that easy investing advice?
The S&P 500 is full of quality global businesses in different industries with good growth prospects. This particular ETF has a very low management fee cost.
As new businesses become blue chips they will displace the old dinosaurs and therefore this ETF will always have relevant investments.
Future Generation Global Investment Co Ltd (ASX: FGG)
You might also want to do the country some good with your child’s investment. This is a listed investment company (LIC) that invests with leading Australian funds that focus on overseas shares such as Magellan Financial Group Ltd (ASX: MFG).
However, the managers work for free – charging no management fees or performance fees – so that 1% of the LIC’s net assets can be donated to youth mental health charities each year.
This LIC will hopefully beat the global index benchmark over the long-term whilst also improving the lives of young Australians.
Costa Group Holdings Ltd (ASX: CGC)
As a share picker myself, I can understand if you’d want to invest in a couple of individual businesses for your child.
You can feel good owning Costa shares because it’s Australia’s largest grower of fresh food including avocados, berries, mushrooms, tomatoes and citrus fruit. It sounds more wholesome to own shares of Costa compared to McDonalds.
Costa could be a market-beater over the long-term. Costa management have predicted that underlying earnings could grow by double-digits for at least the next three to five years.
All three of these shares could beat the ASX’s returns over the next 10 to 20 years and could be good ways to teach a child about investing as well.
Other shares that could be good long-term picks for a child’s portfolio (or yours and mine!) are these leading ASX income winners.
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Motley Fool contributor Tristan Harrison owns shares of COSTA GRP FPO. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.