Aussie Firebug

Financial Independence Retire Early

Nothing written below is financial advice. The below questions and answers are for general information only and should not be taken as constituting professional advice. You should always do your own research when making any financial decisions.


I’m married with two children, aged 1 and 2 years old. What’s the best way to invest money for them to access when they are older? My friends suggested opening a bank account and depositing any cash the kids receive as birthday presents etc. What do you think?

Elle Bee


Firebug’s Answer

Hi Elle,

I love where your head’s at when your children are so young. Not only will you be giving them a financial head start in life, hopefully, they will realise the power of investing and compounding when they receive the gift many years from now. Or worst case scenario, they become Carlton supporters and you’re forced to cut all ties, at least the money would have grown for you over the years 😜.

You really need to make a decision on two things.

  1. What you’re going to invest in?
  2. Whos name it’s going to be held in?

You have a lot of choices when it comes to investing. You could keep the money in a high-interest savings account (HISA). But this is a very risk-averse asset class and not something I would do. You have years at your disposal with the beneficiary not having to rely on this money to survive. They might not even know it exists if you should choose not to tell them. This makes it easier to manage two things, risk tolerance (your kids don’t even know it’s there) and volatility (20 or so years should see a bust/boom or two).

With this in mind, I plan to invest in the Australian market via A200 (Betashares Australian index) for my kids. Switch DRP (dividend reinvestment plan) on and return in 18-21 years and marvel in the glory of compounding that has turned your children birthday money into a nice size deposit for a decent car or house (depending on how generous Nanna is with her birthday day money). The simplicity of the A200 with DRP on is an easy choice for me. If you’re into more diversification I would look at Vanguard’s VGS with DRP turned on.

I like this option because it requires no effort (other than a tax return) for the parents and it will beat the pants off a savings account, returns wise, over a 2 year period! Both the A200 and VGS don’t require rebalancing and with DRP switched on it couldn’t be any easier.

The other big question is to figure out whose name the investment is going to be held in. You can technically invest in a child’s name but it’s a muck around with the tax file number and setting up an account. And depending on how much income the assets are going to generate, it might not be the most tax efficient method.

If you already have a family trust set up, I would use that as the investment vehicle. Trusts cost money to set up and can be confusing though.

If you don’t have one already set up, I think the best way to do it is to open an account in the lowest income earner parents name and just keep a spreadsheet when you use gift money to purchase shares for your child. Even if you use the same account to buy shares for yourself, what you can do is keep a record of when you bought, what you bought and how many units you bought. You can then use a reporting tool such as Sharesight to create a dummy portfolio with those exact trades 20 years later and work out how much the initial investment has grown over time.

Then you can give them a big surprise when the times right!




Im 47 and I have been saving away since before FIRE was a term. My savings rate is about 50% losing 13% to interest on IP’s which is slowly coming down. Realistically Im about 5 years away from making the big change.

My issue is I am 99.5% in property I want to diversify but I am not sure how to do it and not sure of how to allocate my splits.

I am torn between Property, High-Interest accounts, Stocks (ETF,LICs etc) and even bonds. I don’t want to sell off property just work towards a better balance over the next 5+ years.



Firebug’s Answer

Hi Joe,

Nice savings rate!

Losing 13% interest form the IP’s you say? How much are you dipping into your pocket each year 😱? An asset should not be taking money from your wallet, it should be putting cash into it!

I’m feeling ya with the diversification mate. As someone who has three investment properties myself, it’s important to spread your risk across multiple asset classes and sectors.

If I were in your position, I would look at the cash flow of your property portfolio and how much the going market rate is for them. Would you make money selling now? How much?

It all depends on all your goals, but if you’re planning to build an income stream for yourself, negative gearing properties will not be the answer.

You don’t have to sell either. Nothing stopping you from dipping your toes into some ETFs or LICs to get a feel for the stock market.





Great podcasts and website. Loving the content.

In your “Our investment strategy explained” you mentioned the Peter Thornhill approach to investing and said this is something you might look into. This strategy of investing for dividends makes a lot of sense to me also but goes against the traditional diversification. I like the idea of reinvesting the dividends until FIRE and then simply living off them. No need to sell off capital growth.

Just wondering if you will actually consider switching to this approach? If you don’t think you will go this way, is it only because you have set up the way you have already? If you were starting out again would you consider it?


Firebug’s Answer

Hi Steven,

I have indeed modified my strategy to be more focused on dividends. I currently hold nearly $100K in international securities (VTS+VEU) and I think I’ll try to aim for 10% international with the other 90% Australian to maximize the strong yield + franking credits. I’m in the middle of writing a post about ETFs vs LICs which explains what I will be investing in to achieve this investing split.

The only issue with this is the whole diversification thing. I’m still on the fence on that one because there is just too much academically acclaimed studies that continually stress the importance of global diversification. I think it’s just a risk I’m willing to take at this point to get that desired income stream I’m after. I might change my mind on this moving forward as my mind is never set in stone and when I read something that is better than what I’m doing, I have no issues pursuing it. I did go from property > ETFs > ETFs/LICs after all 😜! Never be too proud to judge your own strategy and tweak it where you feel necessary.


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