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Ask Paul: How to invest for our grandchild in Australia?

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Looking to invest for a grandchild in Australia? Here's how ETFs, shares and simple money lessons can help you grow a long-term nest egg for the next generation.

Reader question

Hello, Paul.

Looking to invest for a grandchild in Australia? Here's how ETFs, shares and simple money lessons can help you grow a long-term nest egg for the next generation.

My husband and I used to subscribe to Money magazine in the late '80s and '90s for several years while both working, and valued your advice and opinions.

Now we're both receiving a small amount of government pension each fortnight as we have too much in each of our super accounts.

We have a new grandson (a delight we never thought would happen) and would like to invest some money for him, about $2500.

I've done some research and am leaning towards some kind of shares for him? I would greatly appreciate your thoughts. - Wendy

Paul's response

Hello Wendy, I do appreciate your comment that I did not lead you astray with your money back in the '80s and '90s.

Goodness, that was a long time ago. Like you, Vicki and I also have the pleasure of grandchildren, in our case two little girls from each of our older kids. We do love them.

I had to chuckle about you having too much money in super, that is probably partially my fault, but what a lovely problem it is. Vicki and I are in the same boat, in that we are able to live off 
our super, other investments and my part-time work. Vicki sometimes mentions I should retire fully, but I really enjoy the money-type work I do and, in particular, answering questions in each issue of Money magazine.

So, what do we do about our grandkids? Well, first, as they grow we make them aware of money, even if it means getting cash from an ATM and paying for things when shopping with them and getting change.

As they get older, with their parents' approval, open a bank account for them and pop in a bit of Christmas or birthday money. This money will not grow for them, so don't put in much; it is all about money principles, not amounts.

I agree with you, shares are an excellent long-term wealth creator. We've built a small share portfolio for our four. One of the easiest ways is to invest via an ETF. You can buy these on the ASX or you could use a low-cost manager such as Vanguard or BlackRock.

These allow you to establish an account for your grandchild; you'd invest as trustee for them and you can add to that account.

Over the decades, with periodic contributions, this will grow into a very handy sum for your grandchild, but as they grow, it is also a way of teaching them and talking about money. I can't stress how important this is.

Money remains a bit of a taboo topic with our kids and grandchildren. We really need to talk to them about money as part of our daily lives.

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Paul Clitheroe AM is the founder of Money and serves as the publication's editorial adviser. One of Australia's most trusted personal finance experts, Paul has spent decades helping Australians build wealth, manage debt and make smarter money decisions. He is widely known for host­ing the Money TV program and authoring best-selling personal finance books. Since launching Money in 1999, he has played a leading role in delivering practical, independent financial guidance to Australians. Paul is chair of InvestSMART Financial Services. He was the founding chair of Ecstra Foundation, a national not-for-profit focused on improving financial wellbeing, from 2018 to 2026, and led the Australian Government's Financial Literacy Board and Financial Literacy Australia from 2004 to 2019. In academia, Paul is chair in financial literacy at Macquarie University, where he is also a Professor in the School of Business and Economics. Ask Paul your money question. Due to volume, Paul cannot respond to questions posted in the comments section.
Comments
Borvin Kracman
January 28, 2026 5.07pm

Hi Paul, regarding investing for grandchildren, we set up share accounts for them and I was recently shocked to find that above a net annual income of $416, the child is taxed at 66%! Disgraceful, outdated government policy. We are investigating investment bonds to reduce the tax impost. The government should align its policies to present day circumstances.

dividend income stream of

Andrew McAdie
January 29, 2026 10.20pm

You mentioned the investment for the grandchild is in trust. Assume the grandparent/s is the trustee, will that not affect their aged pension. I have 4 (soon to be 5) grandkids, and I gift them $1k each, then $90 per quarter, equivalent to a dollar a day. Invested in a range of EFT's vis Superhero, with the funds held as "trustee" for the kids, but I must include dividends etc in my tax return. Whilst you cannot give tax advice, is the "trustee" route tax and Pension effective?