INVESTING

Ask Paul: Where can we start investing for our newborn?

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We have recently had a baby boy and would like to set up some form of investment or account where we will deposit money on a regular basis.

Our intention is that he will access it later in life.

What do you suggest would be a suitable course of action that has limited risk but will tick over until the time comes? - Rob

A. What a great idea, Rob!

Angus is keen to reduce the interest payable on his new home loan, but paying down a mortgage early is a trap for many property owners says Paul Clitheroe.

My parents did this for me from birth with not a lot of money each year and in my mid to late 20s it made a huge difference to buying a home and starting my business.

We did the same with our three kids and are about to do it again with our new grandchild.

I suggest an exchange traded fund (ETF) where you can make regular contributions.

The huge and very low-cost managers such as Vanguard and BlackRock are an easy way to get a global or balanced-type fund.

Dollar cost averaging and compound returns will do the heavy lifting for you.

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Paul Clitheroe AM is a respected financial adviser and Money's chairman and chief commentator. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books. Click here to email Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section.
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