I have sourced an investment fund that all parents should invest their children’s entitlements in that will guarantee significant returns over the next 5-10 years.

For parents who know me well, you will know the above statement is my attempt to warning parents of the great danger and risk in putting your child’s money into any type of scheme and investments. I have noticed over the last few years more and more parents coming to me believing they had invested wisely.

Don’t be fooled into thinking you can spot funds that are going to be successful and grow year after year without any significant loss or risk. Don’t be reading articles written by advisors that give you top tips or how to invest wisely.

Investment Manager Are Guessing Too

The so-called “Oracle of Oxford”, once-revered stock picker UK investment manager Neil Woodford, was ousted from his troubled Woodford Equity Income Fund. After the fund haemorrhaged losses for the institutional and ordinary investor. Valued at more than £10 billion (€11.6bn) at its peak in 2017, had fallen to £3.7 billion in June 2019. The brunt of these losses will be to everyday people who will not be able to recover financially from the losses they will have to carry for the rest of their lives.

The Financial Advisors, banks and insurance companies who sold investment products that lose peoples’ money are fine because the majority of them make their commission and fees when they initial sell the products. They might need people to hang on to the investment so there is no clawback in their commission over time but this is insignificant to the amount of money they make at the outset.

ALL THE RISK IS ON YOU, not the person selling you an investment. If the investment goes well they know they can sell you another one at a later point but if it tanks then they might feel a little bit bad, I do mean a tiny little bit.

When should you take out investment products?

After you have cleared all your personal debts. That is you have no credit card debt, personal loans, car loans, credit union loans and no mortgage. When nobody is making money off you and you have saved up a nest egg for the future. This is the point when I suggest that you should start to consider doing something with your savings. Even then it is still complicated because of Means Tested entitlement for both parent and child.

Debt-free and your child’s money is beginning to build-up

Go to An Post state saving bonds https://www.statesavings.ie/. No fees, no hidden commissions, no DIRT or Exit Tax, no hidden penalties when accessing your money and a little bit of return. Ideally don’t put the bond in your child’s name due to Means Tested entitlements.

It genuine worries me when Financial Advisors target parents who have children with special needs. I have now come across several Brokers who have added a page to their website in the hope of catching an opportunity to sell to parents. Parents can sign up to an investment with a few signatures but this could have a major impact on your child’s future trust fund.

My message for 2020 is to be cautious, build financial security for all your family and keep clearing debts.