A guide to investing for your children
Written and accurate as at: Jun 15, 2026 Current Stats & Facts
It’s common for parents to want to support their kids financially, and setting aside money for their future is one of the most practical ways to do so.
But how you go about this will depend on a few things, chief among them your child’s age. Investing directly in a minor’s name comes with limits. Investment income between $416 and $1,307 is taxed at 66%, and anything above $1,307 is taxed at 45%.
That can eat into returns pretty quickly, which is why many families end up looking at other options to help their kids get ahead.
Saving or investing in your own name
For many households, the simplest strategy will be to keep money in a parent’s name and earmark it for their child’s future. This avoids the punitive tax rates that apply to minors and gives you flexibility over how and when the funds are used.
That might involve regularly depositing money in a high interest savings account or investing in a diversified portfolio of shares or ETFs. You could even park the money in your mortgage offset account. This reduces the balance on which interest is charged, meaning you’re effectively earning a return equal to your mortgage rate – and one that isn’t taxed, at that.
Using investment bonds
Offered by insurance companies and friendly societies, investment bonds pool your money and invest it on your behalf, with earnings taxed inside the bond at up to 30% (paid by the provider).
So long as you hold the bond for at least 10 years and adhere to the 125% rule – that is, limit any additional contributions to 125% of the previous year’s contributions – you generally won’t pay any personal tax when cashing out the bond.
Adding to the appeal for savvy parents, when it comes time to pass the bond on to your child, you can generally transfer ownership without triggering a tax event
Contributing to their super
Super might not be the first thing that comes to mind if the goal is supporting your kids, largely because the funds will be locked away for decades. But if liquidity isn’t an issue, that long timeframe can be a strength.
You might choose to top up your own super with an eye towards giving your children some of it as an early inheritance down the track. Or you could add to their own super to help instill a strong savings mindset. Even a relatively small contribution made early in life has the potential to grow multiple times over thanks to the power of compounding.
Making sure your kids develop the life skills they need
Money can open doors, but it won’t necessarily prepare your children for what’s on the other side of them. The financial habits and attitudes they develop will matter just as much as the actual support they receive.
That’s why one of the most valuable investments you can make is helping boost your child’s financial capability. Simple lessons around budgeting, saving, and living within their means can go a long way, and so can encouraging a sense of responsibility and a willingness to work towards their goals.
These foundations become even more important if you plan to provide financial support later on. Unless they have the maturity to handle a sudden windfall, there’s a chance an ‘easy come, easy go’ mindset will win out and they’ll squander it as quickly as it arrived.