Wanting to invest for a child’s future is a very worthy idea. Australian house prices are so expensive that many people need a hand to get onto the property ladder. Investing in ASX shares could be a good way to help in the future.
It can be hard to know where to start because there are thousands of ASX shares to choose from.
If you’re investing for a child’s future then you’re probably looking for something that can be a long-term investment, that provides diversification and will provide attractive returns.
Here are three ideas:
Future Generation Investment Company Ltd (ASX: FGX)
This is a listed investment company (LIC) that invests in Australian funds which focus on ASX shares. However, those Australian fund managers work for free, allowing Future Generation to donate 1% of its assets to youth charities each year.
Since inception in September 2014 the Future Generation portfolio has outperformed the S&P/ASX All Ordinaries Accumulation Index return by an average of 2.3% per annum, before donations. At the end of December 2018, its largest allocations were to funds from Bennelong, Paradice and Regal Funds.
The LIC also aims to increase its dividend every year if possible, it currently has a grossed-up dividend yield of 5.4%.
Future Generation Global Investment Co Ltd (ASX: FGG)
This company is the sibling of the ASX-focused Future Generation. The Global one invests in Australian fund managers that invest in international shares. Those fund managers also work for free, allowing this LIC to donate 1% of assets to charities focused on youth mental health causes.
Since inception in September 2015, the Future Generation Global portfolio has outperformed the MSCI AC World Index (AUD) by 0.5% per annum, before donations. At the end of December 2018, its largest allocations were to Magellan Financial Group Ltd (ASX: MFG), Antipodes Partners and Cooper Investors.
The LIC seems to be currently targeting a 1 cent dividend per annum.
I like that both of the Future Generation LICs would be helping a child’s peers to create a better future.
BetaShares NASDAQ 100 ETF (ASX: NDQ)
This exchange-traded fund (ETF) allows investors to get exposure to the biggest technology businesses listed in the US such as Alphabet, Facebook, Microsoft, Apple and Netflix.
Technology businesses are driving the change in the world around us these days, so they are the ones most likely to develop new revenue streams that would increase their value over the long-term. The current market sell-off could make now a good time to buy this index whilst its value has been beaten down.
I believe all three shares would be attractive investment options. The local Future Generation is the only investment you’re likely to see rising fully franked dividends from, but it could be the one that delivers the lowest total return. The NASDAQ ETF could be the best one to own over the next decade, but it doesn’t offer a philanthropic element like the Future Generation LICs.
Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. 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.