Latest news with #DionneGain
The Age
6 days ago
- Business
- The Age
The investment you need to teach your kids about
It's often said that parents can help their children get an early understanding of investing by buying shares that they can track to gain an appreciation of wealth creation and the basics of the sharemarket. It's part of the same school of thought that encourages parents or grandparents to invest in cash accounts on behalf of children to give them a head start in life plus some early money lessons. But bonds are another potential investment alternative for children – and today they are much more accessible to the average population. In essence, bonds offer the potential for higher returns compared with cash. Credit: Dionne Gain The global bond market is, in fact, 22 per cent bigger than global sharemarkets. Its importance in diversified portfolios is highlighted by the fact that big super funds hold large allocations to bonds in most of their investment options. What makes these investments appealing to investors, and how can they contribute to establishing a robust financial future for young Australians? In essence, bonds offer the potential for higher returns compared with cash while generally presenting lower risk than equities. Examples include government, treasury, corporate, and municipal bonds. A government bond, for example, might raise money to fund projects or to build infrastructure. A corporate bond is instead issued by a company and the money used to help fund initiatives that will develop its business. An investor in a bond essentially lends their money to the issuer to complete these activities and receives the interest payment – or 'coupon' – for doing so. The asset class essentially aims to provide predictable income without too many ups and downs in capital value. This may make it a suitable long-term holding for the type of activities that resonate with parents and children – such as funding education, first-home deposits, gap years, holidays or just building savings from a child's own efforts. Bonds, with their slow and steady growth, help instil the importance of patience and the rewards of disciplined investing. Importantly for younger Australians, investing in bonds provides an excellent opportunity for parents to teach their children smart money lessons such as the value of consistency and the benefits of a long-term mindset. Bonds, with their slow and steady growth, help instil the importance of patience and the rewards of disciplined investing. What's more, this hands-on experience with bonds can boost a child's financial confidence and provide the perfect springboard for understanding more complex investments down the track. It's a much gentler – and safer – introduction to the financial world than the often wild ride of cryptocurrencies or speculative stocks. Of course, no investment is risk-free. Rising interest rates, inflation and the potential for issuers to default on payments to investors are among the biggest risks in fixed income.
Sydney Morning Herald
6 days ago
- Business
- Sydney Morning Herald
The investment you need to teach your kids about
It's often said that parents can help their children get an early understanding of investing by buying shares that they can track to gain an appreciation of wealth creation and the basics of the sharemarket. It's part of the same school of thought that encourages parents or grandparents to invest in cash accounts on behalf of children to give them a head start in life plus some early money lessons. But bonds are another potential investment alternative for children – and today they are much more accessible to the average population. In essence, bonds offer the potential for higher returns compared with cash. Credit: Dionne Gain The global bond market is, in fact, 22 per cent bigger than global sharemarkets. Its importance in diversified portfolios is highlighted by the fact that big super funds hold large allocations to bonds in most of their investment options. What makes these investments appealing to investors, and how can they contribute to establishing a robust financial future for young Australians? In essence, bonds offer the potential for higher returns compared with cash while generally presenting lower risk than equities. Examples include government, treasury, corporate, and municipal bonds. A government bond, for example, might raise money to fund projects or to build infrastructure. A corporate bond is instead issued by a company and the money used to help fund initiatives that will develop its business. An investor in a bond essentially lends their money to the issuer to complete these activities and receives the interest payment – or 'coupon' – for doing so. The asset class essentially aims to provide predictable income without too many ups and downs in capital value. This may make it a suitable long-term holding for the type of activities that resonate with parents and children – such as funding education, first-home deposits, gap years, holidays or just building savings from a child's own efforts. Bonds, with their slow and steady growth, help instil the importance of patience and the rewards of disciplined investing. Importantly for younger Australians, investing in bonds provides an excellent opportunity for parents to teach their children smart money lessons such as the value of consistency and the benefits of a long-term mindset. Bonds, with their slow and steady growth, help instil the importance of patience and the rewards of disciplined investing. What's more, this hands-on experience with bonds can boost a child's financial confidence and provide the perfect springboard for understanding more complex investments down the track. It's a much gentler – and safer – introduction to the financial world than the often wild ride of cryptocurrencies or speculative stocks. Of course, no investment is risk-free. Rising interest rates, inflation and the potential for issuers to default on payments to investors are among the biggest risks in fixed income.
