Beyond the piggy bank: starting your child’s investment portfolio | BetaShares

Beyond the piggy bank: starting your child’s investment portfolio

BY Annabelle Dickson | 11 May 2022
piggy bank

Reading time: 4 minutes

When introducing children to money, parents typically are drawn to giving pocket money which is put into a piggy bank or perhaps deposited into one of the various bank accounts aimed at children.

However, with the cash rate well below 1%, and most savings accounts offering little more, starting a child’s wealth journey is in desperate need of a rethink.

We provide an alternative to the traditional piggy bank – investing in ETFs.

Consider investing, rather than saving

As an alternative to saving money in a bank, investing in ETFs can be an effective way to have your child’s money work for them.

Recent research1 found that just 7% of children in Australia (or roughly 270,000) under the age of 12 have exposure to share investments.

While the number of children with investment accounts is likely to grow over time, it is currently inconsequential compared to the fact that almost half of Australian children have a bank account in their name by the time they turn one2.

Not only is investing in ETFs more likely to outperform inflation and increase in value, it also has the potential to be valuable in two other ways: setting the foundations of financial security for when they enter adulthood, and introducing them to the concept of investing.

ETFs can be used as building blocks of a child’s investment portfolio, and a diversified ETF can simplify things even further.

Risk profile and investment horizon

It is important to note that saving and investing carry significantly different levels of risk. Depositing money in a bank account is virtually risk-free but the trade-off is that it is accompanied by marginal returns.

On the other hand, investing bears greater risk but also the potential for higher returns. Risks can vary and include volatility i.e. short term rises or falls in investment values.

This is where being mindful of the investment horizon is especially important. The longer an investor is in the market, the longer there is to ride out market volatility and hopefully end up with a greater possible return.

By investing from birth to 18-years old or longer, your child has time to weather volatility and other risks, which is likely to be compensated by higher returns than saving cash.

Market vs bank return

Source: Bloomberg/RBA/BetaShares. Past performance is not indicative of future performance.

It is normal to experience volatility when investing, and market downturns are to be expected throughout an investment journey. Yet over the long term, markets generally trend upwards.

The MSCI World Index has gone through periods of volatility over the last 18 years including the Global Financial Crisis (GFC) in 2008 and the covid-induced market downturn in March 2020.

Yet over the long term, returns from global equities have been higher than the Reserve Bank of Australia’s one-year term deposit rate – even if the latter has been steadier.

In addition, income from equities throughout this time can be reinvested via a dividend/distribution reinvestment plan (DRP) to earn compounding returns, accumulate shares/ETF units and smooth out the cost price.

One-stop shop

Building a diversified investment portfolio can be challenging. A diversified ETF such as the BetaShares Diversified All Growth ETF (ASX: DHHF) can simplify things by acting as an all-in-one investment solution for your child. DHHF provides exposure to around 8,000 securities listed on over 60 global exchanges, all in a single trade.

DHHF’s portfolio is made up solely of equity ETFs which means it has high growth potential over a longer period. It is also high-risk which may be suitable for children as they tend to have higher risk tolerance.

The ETF can be used as the core of your child’s portfolio without a substantial financial commitment from the outset.

asset allocation

From its inception in December 2020 to end April 2022, DHHF has returned 9.43% per annum. In contrast, the cash rate is 0.35% at the time of publishing.

To further bolster your child’s ETF portfolio, dollar cost averaging is a simple strategy to grow the holding. As an alternative to depositing funds regularly in a bank, dollar cost averaging can be used by investing a consistent amount of money on a regular basis over a long period of time.

This strategy aims to mitigate the risks of trying to time the market and can help in reducing the effect of market fluctuations.

Keep in mind that investors must be 18 years or older to buy and sell ETFs, yet you can open a minor account in your child’s name via a broker. The ETFs are then owned by the child but cannot be accessed until they are 18-years old.

If the parent holds the ETFs in their own name, the dividends are required to be included in their tax return. In this case, the investment can be transferred to the child when they turn 18. Bear in mind that this transfer will be treated as a capital gains tax event.


Investing in ETFs for your children comes with the benefits of compounding and the likelihood of higher returns than the returns from a savings account.

In fact, creating an investment portfolio is incredibly simple and with one trade your child can have access to markets all over the world.

So, why not retire the piggy bank and invest in ETFs?


There are risks associated with an investment in DHHF, including asset allocation risk, market risk, currency risk, underlying ETFs risk and index tracking risk. For more information on risks and other features of DHHF, please see the Product Disclosure Statement.

BetaShares is not a tax adviser. This information should not be construed or relied on as tax advice and you should obtain professional, independent tax advice before making any investment decision.




  1. Faye Simpson  |  May 25, 2022

    So if dividends exceed the tax threshold for minors – what then?

    1. BetaShares Client Services  |  May 30, 2022

      Hi Faye,

      Thank you for your comment.

      Unfortunately, we are not tax experts and cannot provide advice on this topic. Please see a link to the ATO website regarding children’s share investments:,PAYG%20tax%20was%20withheld%2C%20or

      We recommend you seek out the help of a tax expert who will be able to further assist you with your specific tax queries.

      BetaShares Client Services

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