Dos and don’ts when investing for the grandkids

Font Size:

The doyen of the personal finance industry, Noel Whittaker, answers a question about investing for the grandchildren – or for yourself.


Q. Erica

I’m building up some funds for the grandkids. At the moment I have two bank accounts with about $1000 in each. I keep hearing about ETFs (exchange traded funds), but don’t really understand them. Is that a better place for these funds? Or do you have another suggestion? And do I need to write this into my will?

A. It’s important to understand in whose name the money should be in. You could have the money in your name, but that could have implications for Centrelink as it builds up, or in a parent’s name as trustee for the child or in the parents’ own names. An ETF is a share-based investment, often an index fund, but I would not be worrying about that until you have about $5000 to invest.

The following information is from Noel’s book, Making Money Made Simple.

ETFs are funds that trade on a stock exchange, just like ordinary shares. They combine the investment advantages of a managed fund with the ease and cost-effectiveness of share trading.

You can use ETFs for cost-effective, easy access to markets and asset classes you might not otherwise have access to, such as debt, derivatives, currency and commodities.

Two index funds I use myself are:

  • SPDR S&P/ASX 200 ETF (STW)
  • Vanguard Australian Shares Index ETF (VAS).

If you want to add a bit of spice to your life, you could go the other route and have a go at picking shares yourself. As somebody who has been trying to do this for many years, I can assure you it’s much harder than it seems. For starters, the key to being successful is to find an undervalued share, which is hard to do given the wealth of information available. Most of the weekend papers publish brokers’ tips; if you choose a stockbroker they will make recommendations for you, or you could subscribe to blogs, magazines or newsletters that specifically focus on finding value in the share market. As far as I’m concerned, it’s all too difficult, and way beyond the scope of this book. But best of luck, if that is the way you want to invest.

Do you have a question you’d like Noel to tackle? Email us at [email protected]

Noel Whittaker is the author of Making Money Made Simple and several other books on personal finance. You can learn more at

If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.

Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

Join YourLifeChoices today
and get this free eBook!

By joining YourLifeChoices you consent that you have read and agree to our Terms & Conditions and Privacy Policy


Noel Whittaker on riding out the storm

Personal finance expert answers key financial questions from panicked Australians.

Be prepared – things will get worse before they get better

COVID ‘widening gap between savvy money managers and those who live for the moment'.

How much should Peg keep in cash?

What's the ‘rule' about keeping some funds readily accessible for emergencies?

Written by Noel Whittaker


Total Comments: 3
  1. 0

    You can start a Stockspot ETF account for kids with $500 and keep adding to it when you please. There are no fees until you reach $10,000
    We use this for our grandkid’s birthdays etc
    The parents also add to it if they have a spare $100 or so

  2. 0

    noel, putting money into a parents trust for the grandkids, seems to me, would still be considered “gifting” by Centrelink. Right or wrong??

    • 0

      If the money is put in an account in the child’s name then yes. If the money is in an account that states “in trust for xxxx Child” Then the account is treated as a Trust and the balance is and asset any income earned on the account is assessed as Income against the Pension etc.



continue reading


Friday Funnies: Short jokes for the shortest month

February flies by too fast, just like these short but sharp jokes. What is the recipe for Honeymoon Salad?Lettuce alone...


Succulent Spice-Roasted Salmon

These little salmon bites are something I've made time and time again over the years and this method of roasting...


How to take great pictures of gardens

If you've never been too good at taking pictures of your beautiful blooms, now's the time to brush up on...

Aged Care

Paid on par with cleaners: the broader issue affecting aged care

Paid on par with cleaners: the broader issue affecting the quality of aged care Ben Farr-Wharton, Edith Cowan University; Matthew...


Researchers fear diet produces ‘untoward effects on the heart’

The keto diet, lauded for its purported fat-burning capabilities, could be bad for your heart, according to new research. The...


Vaccine overdose cases raise questions over doctor training

Australia's vaccine rollout suffered a major hiccup, with health minister Greg Hunt revealing on Wednesday that two elderly residents at...

Retirement Income

Why middle-income Australians are the big losers in retirement

Australia's middle-income earners are losing out when it comes to retirement income. That's the view of Mercer's senior partner, David...


Nine food and heart health myths busted

Should you cook with butter or olive oil? Is that drink of red wine protecting your heart? Pink Himalayan salt is healthy, right? There...