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Skip the plastic and gift children a better financial future

Published on 15/12/2022

Mum with baby small

Investing in the future of our loved ones is something many of us frequently do, in a range of ways. We support their education, pay for better healthcare, and invest in good nutrition. We all want to provide a strong foundation for those most important to us, whether they're our children, grandchildren, partner or extended family. 

So this year, instead of the usual plastic gifts (some of which will be forgotten a month later), why not gift into your loved one's investment fund or KiwiSaver fund and help secure their financial future? 

Co-founder and MD of Simplicity Sam Stubbs says it's the perfect way for people who are conscious of 'ethical gifting' to provide a more meaningful present and help set family members like the grandkids up for life.

"I think for many of us, the one thing we don't like about Christmas or birthday gifts is that it can become just this mountain of plastic and rubbish from all the packaging and presents," he says. 

"Instead of giving a loved one something made overseas like a plastic toy that has probably emitted a lot of carbon to make and is generally not good for the environment, you can give them something which will grow in value over the long term and can do a lot of good." 

"For parents or grandparents, gifting the dignity and freedom of choice that financial security provides is priceless – especially when you consider the power of compounding interest", says Stubbs.

There are a couple of ways you could gift your children or grandchildren. If you, for example, make a $100 contribution to your 10-year-old child's Investment Fund, with a 5% assumed annual rate of return after fees and tax, that money will more than double over 15 years.

"Or you could also set up a recurring payment into their KiwiSaver Scheme. Using Sorted's Savings Calculator, you can see that if you help set up a KiwiSaver for your child or grandchild and every day from birth you pay into that account the cost of a cup of coffee, say $5, by the time they are 25 years old, again using the 5% annual return rate, they could have over $88,000. That's life-changing. It's literally like giving your loved one an $88,000 future savings plan."

One of the advantages of contributing to a child's KiwiSaver is knowing that the money is locked in and can't be touched – by anyone – until they are grown up and ready to buy their first home or retire, adds Stubbs.

"You're helping give them financial (and maybe even housing) security, which is a fantastic leg up in life, but it's also a great backstop as well."

Whether it is a KiwiSaver scheme or Investment fund, you'll be helping to secure the future of a loved one, and you'll also be doing good for the planet as well. If you're a Simplicity member, gifting can be as simple as 1, 2, 3 - we provide a handy guide for gifting into either your loved one's KiwiSaver or Investment Fund account here.

Simplicity is a nonprofit, owned by the Simplicity Foundation - which at its core has the ethos of investing with a conscience.

Our funds don't, for example, invest in companies with significant exposure to fossil fuel extraction, tobacco, weapons, landmines, alcohol, nuclear energy, adult entertainment and gambling. 

In fact, Simplicity donates 15% of its one low fund management fee to the Simplicity Foundation, which uses the money to support causes that benefit New Zealanders and NZ natural resources at risk. The foundation has received over $5 million to date, distributing donations to over 80 charities including Orange Sky, Trees That Count, City Missions, Women's Refuge, Variety and Lifeline.

"We have a charity that owns 100% of our business and basically, we aim to be the disruptor across the financial services industry. We do this by effectively charging lower fees, which we are able to do because we don't need to make a profit," says Stubbs.

"100 years from now, Simplicity will still be here. And the children of your grandchildren could have greater housing security and financial security because of a wonderful Christmas present you gave their parents in 2023 that cost you the price of a plastic toy, or your daily coffee".

Enjoy a more meaningful exchange with your child or granchild by helping them grow their financial future. 

Disclaimer: With investing, there are no guarantees. You may not make money, and you may even lose money that you invest. Simplicity doesn't provide personalised financial advice or recommendations. We provide general information only, that’s current at the time written. When considering whether an investment is appropriate to your needs or objectives, you should consider seeking independent advice from an authorised financial, legal or tax advisor.