Friday 3 September 2010

Net Worth of My Children

No, this isn't a soppy "my kids are priceless" post, just an occasional updates on their financial net worth. As of 30 August, DS1 (10 yo) had a net worth of $55,504.50 spread between his retirement savings account (superannuation), share portfolio and Vanguard Index fund investment. DS2 (4 yo) had a net worth of $7,091.64 - with relatively more invested in bank accounts, a small retirement savings account, and a small stock portfolio.

The chart below shows the progress of their net worths over the past few years. I had hoped that the stock investments and superannuation account deposit I had made for DS2 would have grown enough by now to match the value DS1 had when he was four. Unfortunately the GFC has meant not much growth in the investments of DS1 and DS2 over the past three years, so DS1 is falling behind. The small overall growth in DS1's NW over the past three years has been almost entirely due to the money he has earned busking, at the government superannuation co-contribution matching amounts he has received into his retirement savings account when he has deposited some of his earned income into super each year. He was also helped by my switching his super out of the geared share fund at the start of the GFC, and moving back into shares close to the bottom in 2009.

The chart also shows that from age 4-7 DS1 saw a substantial rise in his NW. This was due to a combination of his stock portfolio doing very well in that period, but also because he (with a lot of help from me) had a paper round earning almost $100 a week for those years. As I don't feel like getting up before dawn anymore to "help" with a paper round, DS2 will have to find some other source of revenue. If he manages to learn a bit of recorder music I think I'll let him join DS1 when he goes busking from an hour on the weekend - they can split the earnings which should help DS2's age-equivalent NW catch up over time. Although DS2's presence may help DS1 collect a bit more when busking, sharing it will reduce DS1's busking income - his first experience of 'taxation' and 'redistribution of wealth' ;)

Subscribe to Enough Wealth. Copyright 2006-2010


Anonymous said...

Your kids are clearly going to be well off in their retirement. :-)

Where are their retirement savings stored? Taxable bank accounts? said...

Details are in earlier posts, but no, their retirement savings are stored in concessionally taxed superannuation accounts, not taxable bank accounts.

DS1 has one 'child super account' (where parents/grandparents and others can contribute into) and one 'retirement savings account' (into which he makes personal, undeducted contributions from his earned income - paper round, busking etc - and some years was therefore also eligible for the government 'co-contribution').

DS2 has one personal superannuation account.