'The gift that keeps on giving': CommSec's tips on buying ASX shares for your kids this Christmas

If you want to buy ASX shares for your kids this Christmas, don't hold back.

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If you ask the average Australian child what they hope to get in their Christmas stocking this year, I'd wager that not too many would tell you 'an ASX share'. Yet buying ASX shares for our kids might be one of the best gifts you can give. Choose right, and they'll certainly keep on giving.

But if you've ever tried to buy shares for a minor, you'll know that it can be an enormously complicated process. There are special rules in place for investing on behalf of a child, as it has been an area that has been exploited by unscrupulous adults for tax-dodging purposes in the past.

That's why Commonwealth Bank of Australia (ASX: CBA)'s CommSec has launched a special product to help parents, relatives, friends, or guardians invest on behalf of a minor. CommSec has just released research that found almost 60% of Australian parents have plans to invest on behalf of their children, but only 23% have actually started doing so.

Buying ASX shares for kids

Here's some of what CommSec senior economist Ryan Felsman had to say on this matter:

It may not be the top item on a child's Christmas wish list but many relatives no longer want to purchase presents that kids outgrow or that will end up in landfill.

Family members may then opt to do the same with other events like birthdays or Lunar New Year.

While investing in the share market for your children can seem like a daunting prospect, teaching them about wealth accumulation and financial literacy at an early age could help set them up for life…

CommSec recently launched a redesigned experience for parents and guardians looking to open a Minor Trust Account, so whether you're a parent, grandparent, uncle or aunt, it is one way to invest on behalf of a child — or children — to help kick start their financial future.

CommSec's Minor Trust Account is a brokerage account that is operated by an adult on behalf of a minor. It effectively functions as a trust (but without a deed), with the adult acting as the trustee and the child as the beneficiary. As such, it facilitates buying ASX shares for a minor.

Once the child turns 18, these accounts are designed to enable the now-adult to transfer the investments to their own fully-fledged trading account.

Something to consider if you're stuck for a Christmas gift for your kids this year. They may not thank you too enthusiastically in 2023. But they certainly will down the road.

But keep in mind that, as we mentioned earlier, trusts can have complicated tax implications, especially for minors. So make sure you consult with a tax professional before heading down this path. The last thing you want for Christmas is a call from the ATO.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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