# Non registered In trust account for minors: suggestions



## Plugging Along (Jan 3, 2011)

My kids are old enough that they would like to invest their extra money. The purpose of this money is long term (after they are done school), and I am looking for some suggestions. I have tradition been with an advisor for our registered investments (and will continue to do so, so that is NOT the purpose of this thread). They already have all of their RESP maxed, so that is something different. 

Here's the facts:'
- Best tax efficient DIY funds for minors. The account will be opened as an Information In trust account. Capital gains attributed back to the kids, dividends, and interest to the parents. 
- Account will be with TD, and they will be eligible for the $10 trades under our family account.

- Initial amounts will be about $10 k each, and they will most likely put somewhere between min $2-3K a year (they get a lot of gift money, and save from babysitting and odd jobs) for the next couple of years, and then a little more when they start working, so maybe another $5K a year? I don't know how much teens will make part time
- They are 10 and 13. So when they turn 18, they will most likely transfer the accounts to their TFSA

Any suggestions. The purpose of this money is for them to take advantage of compounding, and get a good financial foundation. I would like them to be better DIY that I am. Any thoughts?


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## OhGreatGuru (May 24, 2009)

There are a number of threads on this subject. Suggest you do a search and some reading. There are a couple of issues:

1. Income attribution for tax purposes - I think there are some work-arounds for this.
2. You mention access to "trading" on a family account. I don't think a minor can legally trade. There might some work-arounds where the account would be joint with an adult, but I doubt they can have trading authority, unless they do it under the table, or the adult does it for them.


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## Plugging Along (Jan 3, 2011)

OhGreatGuru said:


> There are a number of threads on this subject. Suggest you do a search and some reading. There are a couple of issues:
> 
> 1. Income attribution for tax purposes - I think there are some work-arounds for this.
> 2. You mention access to "trading" on a family account. I don't think a minor can legally trade. There might some work-arounds where the account would be joint with an adult, but I doubt they can have trading authority, unless they do it under the table, or the adult does it for them.


Sorry, I wasn't clear. I know how to set up the account and the 'technical' pieces such as the trading on their behalf, I had an informal Trust before, but one that I didn't do much with. 

My question is WHAT to invest in that is tax efficient. So similar to those of us the have their TSFA and RRSP maxed out. Something equivalent of a Couch Potato for minors that is tax efficient, either ETF or MF (no single equities) for a mid to long term. A lot of the Coach Potatoe seems to only work with the registered portfolios, and I have been research, but with the tax changes on the ETF that don't do distributions, I was looking for some other options.


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## Plugging Along (Jan 3, 2011)

BumpIng. I have the accounts set up, money is ready to transfer but still figuring out the what to invest in. I was reading about the Horizon funds but with the CRA changes, think it maybe more hassle. Any thought for tax efficient for minors?


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## Jimmy (May 19, 2017)

Some ideas. 

Actually dividends are tax free up to $43,000, in fact it looks like you make money for 'eligible' dividends. So you should be ok w Canadian ETFs. And you only pay 8% tax on 'non-eligible' dividends from CDN ETFs of US and Intl stocks

https://www.taxtips.ca/taxrates/on.htm

I like Horizons too but you may have to wait awhile to see if the Liberals take away the tax adv of their ETFs. 

Another idea is to use options which are all cap gain to 'create' the indexes you want.


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## james4beach (Nov 15, 2012)

How much oversight would you have over what trades they are making? I don't think a 10 year old should be able to make arbitrary stock trades. A couple days with TQQQ or a penny stock and they could lose most of their money.

I like the idea of having some rules/policies such as no individual stocks (which you mentioned) or an explicit list of permitted securities which must be chosen from.

When adding increments like 2k, ETFs are not very efficient as $10 eats into that pretty quick ($10 / 2K is 0.5% which is far more than the MER). For these kinds of small amounts, your best bet might be the TD e-series index funds such as TDB900 at 0.33% MER.

How about something like this... since you're starting them off with 10K, what if you put that in a diversified fund ETF such as VBAL, XBAL or perhaps VCNS to create a more conservative anchor for the kids. That's a single $10 transaction which makes sense for a larger amount. I think these funds have minimal distributions.

Then you could have the kids use the e-series index funds for their additional amounts, along with a rule that they don't sell the initial position you started them with.

The couch potato web site even publishes model portfolios using the e-series funds. See Option 2:
https://canadiancouchpotato.com/model-portfolios/


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## humble_pie (Jun 7, 2009)

Plugging Along said:


> They are 10 and 13. So when they turn 18, they will most likely transfer the accounts to their TFSA
> 
> Any suggestions. The purpose of this money is for them to take advantage of compounding, and get a good financial foundation. I would like them to be better DIY that I am. Any thoughts?



Plug here's the thought i had when you first posted to start up this thread. 

there's a mixed nature to this initiative & the conflict is evident, imho. On the one hand you are seeking a children's investment account as an extension of the parents' investment portfolios & have therefore - appropriately enough - searched for a vehicle whose taxation consequences will favour the parents.

the Horizons ETF which is now in CRA limbo would have filled the bill from this tax perspective, ie capital gains would be taxed in the hands of the girls, while the fund itself does not pay out any distributions or dividends, therefore there is no interest or dividend income that could be taxed in the hands of the parents.

but at the same time you say you would like the new mini-fund to be a teaching model for the girls. This is where i have some difficulty. The chosen ETF, with its sophisticated taxation consequences that may be in process of being phased out, is not something that any 10 to 13 year old would even remotely understand. It might suit the parents' overall financial plan but i really do have difficulty imagining how pre-teens would want to learn anything about investing from this abstract, dry-as-dust vehicle.

what kind of investments might the girls actually enjoy learning about? would fashion interest them, for example? there are lots of pre-teen fashion houses in the US & your daughters are likely wearing some of the brand names.

then there are kids snacks? music? the companies that manufactured their phones or their tablets? their backpack, bicycle or ski boot labels? publicly traded companies in these sectors would likely be more interesting to pre-teens than some boring, incomprehensible taxation structure.

the unfortunate by-product could be that some dividends might end up taxable in the parents' hands but the envisioned trust fund would not be so large that this taxable income could become a burden imho. And among companies making products that kids like & use, you could always head for the stocks with low or no dividends.


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## humble_pie (Jun 7, 2009)

james4beach said:


> How about something like this... since you're starting them off with 10K, what if you put that in a diversified fund ETF such as VBAL, XBAL or perhaps VCNS to create a more conservative anchor for the kids. That's a single $10 transaction which makes sense for a larger amount. I think these funds have minimal distributions.
> 
> Then you could have the kids use the e-series index funds for their additional amounts, along with a rule that they don't sell the initial position you started them with.
> 
> ...



lol jas4 do u think that pre-teen girls are going find the above ^^ has sex appeal ...

one could invert the situation & say that some index or ETF vendor should design a new vehicle full of malade (cool stuff) - clothing, music, smartphones, tablets, bicycles, sports equipment, even pet supplies - with the express purpose of selling it to kids.


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## james4beach (Nov 15, 2012)

humble_pie said:


> lol jas4 do u think that pre-teen girls are going find the above ^^ has sex appeal


Plugging Along said that the intended purpose was for the kids to "get a good financial foundation" and was looking for "something equivalent of a Couch Potato for minors".

It doesn't sound like flashy kid or teen-specific topics are the intention here, nor do they need to be. I think exposing kids to real adult topics like index funds (say the e-series version of couch potato) is a perfectly reasonable thing to do.

How about delving into the fun of what these index funds represent? Maybe the kids start with the Canadian index fund. You can look at the holdings, and the familiar companies inside ... oh, there's Royal Bank. CN Rail. What kinds of things get shipped by rail?

Get on the bikes, go bicycle to a local freight train crossing (or drive to a train yard) and look at the containers. What can you see? Most of the cars will be marked. Even in my 30s, I still think it's pretty cool looking at what's being transported by train.

Lots of fun things to talk about there! I don't think any of this is gender specific.

How expand to the international e-series index funds. What countries are contained inside it? Let's look at them on a map ... explore the countries and cultures that make up those funds.

That could be a fun activity with the kids.

What are some of the companies we know in those other countries? Nestle is a big one. Toyota. Go the store and find some delicious Nestle thing... now talk about how *that* sale has produced revenue for the company. You own a (small) part of the Nestle company, so all sales, to millions of people worldwide, produce wealth for you.


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## james4beach (Nov 15, 2012)

And some other things you can do with the kids, to get an understanding of what the investments are composed of. Build up to your couch potato index funds, to make the investments more meaningful: learn what countries are in the fund, identify the flags... DRAW the flags.

Get them to estimate populations. Look at Canada on the map. We have 37 million people here, but there's lots of extra space. How many people might live in Japan?

Play a game and identify the country name from the flag.

https://www.ishares.com/us/products/244049/ishares-core-msci-eafe-etf

I linked to an iShares fund, not to say you should use this one, because they have a nice country list and even a global map you can click on to see % allocation... the e-series international index contains the same stuff. They're all MSCI EAFE index.

So much to do. Field trips to the grocery store, field trips to the train tracks. If you live in a port city, you can go the docks to see how goods are sent across the world, with those big stacks of massive containers.

Call me crazy but I think this all sounds really fun. I wish I had kids to do these things with! They will learn _so much_ about the world while doing this... how exciting to think that saving up their money involves interactions with all these grand things.


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## humble_pie (Jun 7, 2009)

me i'd approach a pre-teens investment project strictly from the angle of what the kids would want to learn about. I wouldn't let them buy trash but there are thousands of conservative quality kid-friendly companies to choose from. Apple. Nike. Pizza. Amazon. Shopify. RYU Apparel. Guess.

at the other extreme, there are parents who'd want a minor's trust account to be simply a tax-free extension of their own investment portfolios. IE capital gains to be taxed in the hands of kids means zero taxation for the kids. Meanwhile if a chosen investment vehicle has no dividend, interest or other distribution, then it's zero taxation for the parents.

i for one would predict that pre-teens are not going to be interested in the above scheme. I don't see pre-teens paying any attention to standard couch potato websites either. 

me i think a parent could decide first whether they want to channel a portion of their stock market invested capital as tax-free under the kids' name; or whether they want to set up an investment entity that pre-teens would actually be interested in & would want to learn about.

for myself the choice would be easy. I'd do the latter. I'd go 100% for kid-friendly investments. If there were tiny taxable income consequences for myself as the parent trustee - a few dividends might end up taxable in parents' hands - i'd be happy to accept those.


.


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## Plugging Along (Jan 3, 2011)

Thanks for responding to my bumps, great thought starts for me. Instead of replying to each individual posts, I will try to organize my thoughts by topic area (more for me) 



humble_pie said:


> there's a mixed nature to this initiative & the conflict is evident, imho. On the one hand you are seeking a children's investment account as an extension of the parents' investment portfolios & have therefore - appropriately enough - searched for a vehicle whose taxation consequences will favour the parents.
> …but at the same time you say you would like the new mini-fund to be a teaching model for the girls.


In terms of goals, you have it right and there is some conflict. Let me see if I can articulate what I want, and then get some input from people here. For context, I have try to teach my kids finances in small steps that build on each other in an age/intellectual appropriate manner in order to not overwhelm them. Their younger years where about teaching them about the mindset of saving, critically thinking about their spending in terms of value, and future opportunity costs, and tying spending into personal values, short term, mid term, and long term goals etc. I have even been teaching them about taxes, even though they don’t pay, they get are a part of the process as put our tax files together and visit our family accountant. 

The next stages I would like to teach are about the value of compounding, and starting to see investments outside of cash investment. The main goal right now would be to invest their money as an extension of our portfolio, in a tax efficient manner (if possible). However, the ease of tracking in a non-registered account is more important (as I am kind of bad at it), I don’t mind paying taxes as I already pay on their dividends and interests. I am actually not opposed to individual equities, but there are certain restrictions I have due to my spouse’s work, so if they are good investments, then I would consider them if they are not restricted stocks. When asked, my girls want to make money their money grow in the quickiest time possible. I would like that, except not in a ‘gambling’ manner which is what they learned in their stock portfolio competition at school. It will primary myself managing their funds and doing their trades, with input and discussion with them (that’s the learning part). Currently, I do not see them taking a huge interest in research investments or stock hence why I think a ‘couch potatoe’ is more appropriate. Based on their personalities, I think something relatively handoff is better for now until they hit the next phase of going through allocations which they are not ready for. I hope by the time there are 18, they will want to take more of an hands on approach, but small steps for now. 

So in short, I am looking for:
1. Something that I can invest their money in, and have it grow over the years. We are willing to take on higher risks (I don’t need any fixed income). With time on their side I do NOT want them to be conservative, this is the time for them to take risks but not gambles. Teaching them volatility now is important
2. Ease of reporting or tracking for CRA since it’s a non-register account.
3. It would be nice to have it somewhat tax efficient as it’s an informal In trust account for minors so attribution rules for dividends and interests do apply. 
4. I am less worried about the fun aspect or the girls interests, as I am pretty good at getting through to them and I will go it that further in my next posts. 

So if you were looking to invest something for minors with the goal over the next 5-10 years they will take over the accounts in transferring to TSFA what would be some good options from a growth standpoint outside of those Horizon Funds for now.


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## Plugging Along (Jan 3, 2011)

james4beach said:


> How much oversight would you have over what trades they are making? I don't think a 10 year old should be able to make arbitrary stock trades. A couple days with TQQQ or a penny stock and they could lose most of their money.
> I like the idea of having some rules/policies such as no individual stocks (which you mentioned) or an explicit list of permitted securities which must be chosen from.
> 
> When adding increments like 2k, ETFs are not very efficient as $10 eats into that pretty quick ($10 / 2K is 0.5% which is far more than the MER). For these kinds of small amounts, your best bet might be the TD e-series index funds such as TDB900 at 0.33% MER.
> ...


I will be making the trades on their behalf. Our family process is more about bringing up the ideas, then discussing and thinking through why are making those decisions. That’s where the learning is for my kids at this stage. Because they are very young and time on their side, this is where I don’t what them to be too conservative. It’s better they learn volatility and risk at younger age than be too fearful at an older age. 

I am mindful about fees, but the performance is more important. With the ETFs you mentioned, tax wise, are they easy to keep track of and report on for CRA. My question with the couch potatoe is are they as good in non registered funds. I had been reading and from what I read, it seemed that they are not recommended for non registered accounts due to


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## Plugging Along (Jan 3, 2011)

humble_pie said:


> It might suit the parents' overall financial plan but i really do have difficulty imagining how pre-teens would want to learn anything about investing from this abstract, dry-as-dust vehicle..


Surprisely, my kids do really well in the abstract work, dry as dust not as much. They are both results focues, hence why I feel if they see the returns over the years, that will be okay with it was boring as heck to get there. 


humble_pie said:


> lol jas4 do u think that pre-teen girls are going find the above ^^ has sex appeal ...
> one could invert the situation & say that some index or ETF vendor should design a new vehicle full of malade (cool stuff) - clothing, music, smartphones, tablets, bicycles, sports equipment, even pet supplies - with the express purpose of selling it to kids.





humble_pie said:


> what kind of investments might the girls actually enjoy learning about? would fashion interest them, for example? there are lots of pre-teen fashion houses in the US & your daughters are likely wearing some of the brand names.
> then there are kids snacks? music? the companies that manufactured their phones or their tablets? their backpack, bicycle or ski boot labels? publicly traded companies in these sectors would likely be more interesting to pre-teens than some boring, incomprehensible taxation structure.
> the unfortunate by-product could be that some dividends might end up taxable in the parents' hands but the envisioned trust fund would not be so large that this taxable income could become a burden imho. And among companies making products that kids like & use, you could always head for the stocks with low or no dividends.


One of the things have tried to teach my girls is sex appeal or bling is not as important as the substance. In their lives we spend a lot of time discussing about things that appear ‘sexy’ or the kid equivalent. My kids are just not very material driven. They know their brand names, choose to have their own style, they are very anti-VSCO girl (google if you don’t know what it is, I don’t even what to explain that) 
If I could find some well know companies that are good buys, that would be more important than something my kids personally want to buy (if that makes sense) I think they would like the fact they own something they may hear of in the news or shopping, even if they do not personally have themselves. I hope that makes sense. For example, they were given $500 Disney stocks for baby shower presents. We pull out the stock certificate when they get a dividend check and then they look up the stock up price. The check gets put in their account, and then they calculate how much stock they have now. It’s just south of $3k. If I could find companies that would be good long term buys like that, I would be fine too (as long as they aren’t on my spouses restricted list). 
If I could find an ETF, that mimics stocks like that, and are easy to report for taxes, then I would be happy too. They definitely don’t need to be sexy. I actually do not want to buy stocks just because they like the product.



humble_pie said:


> me i'd approach a pre-teens investment project strictly from the angle of what the kids would want to learn about. I wouldn't let them buy trash but there are thousands of conservative quality kid-friendly companies to choose from. Apple. Nike. Pizza. Amazon. Shopify. RYU Apparel. Guess.
> 
> at the other extreme, there are parents who'd want a minor's trust account to be simply a tax-free extension of their own investment portfolios. IE capital gains to be taxed in the hands of kids means zero taxation for the kids. Meanwhile if a chosen investment vehicle has no dividend, interest or other distribution, then it's zero taxation for the parents.
> 
> ...


Because I am quite creatively, and have been blessed with two kids that just get adult concepts pretty quickly, I am somewhere in between. I don’t just want to put my stocks in their portfolio. I already have this in their RESP’s which we talk about. I want to put this is a seed money into their accounts so it will grow for now, and I want them to start getting in to the habit of depositing the money yearly, and making some of these choices. Hopefully, by the time they are adults it will become second nature to just put money into an investment account for investing, in which then they will start to figure out their own portfolios (which as much guidance as they want from us as parents). 
I asked if they wanted to look at specific companies, and they don’t right now.


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## Plugging Along (Jan 3, 2011)

james4beach said:


> Plugging Along said that the intended purpose was for the kids to "get a good financial foundation" and was looking for "something equivalent of a Couch Potato for minors".
> It doesn't sound like flashy kid or teen-specific topics are the intention here, nor do they need to be. I think exposing kids to real adult topics like index funds (say the e-series version of couch potato) is a perfectly reasonable thing to do.
> How about delving into the fun of what these index funds represent? Maybe the kids start with the Canadian index fund. You can look at the holdings, and the familiar companies inside ... oh, there's Royal Bank. CN Rail. What kinds of things get shipped by rail?
> Get on the bikes, go bicycle to a local freight train crossing (or drive to a train yard) and look at the containers. What can you see? Most of the cars will be marked. Even in my 30s, I still think it's pretty cool looking at what's being transported by train.
> ...


We have already started talking about index funds. Once I find the right investment, I pretty good at finding a way to make it fun. My kids have done more train yards, probably have been exposed to trains more than most adults when they were really little (I used to work for the railway). They can still differential between bulk trains, the different commodities, and intermodal containers. 
We are pretty fortunate that I can usually find a contact to teach my kids about whatever industry or company they are interested in. It’s more about finding the investments right now. 



james4beach said:


> And some other things you can do with the kids, to get an understanding of what the investments are composed of. Build up to your couch potato index funds, to make the investments more meaningful: learn what countries are in the fund, identify the flags... DRAW the flags.
> Get them to estimate populations. Look at Canada on the map. We have 37 million people here, but there's lots of extra space. How many people might live in Japan?
> Play a game and identify the country name from the flag.
> I linked to an iShares fund, not to say you should use this one, because they have a nice country list and even a global map you can click on to see % allocation... the e-series international index contains the same stuff. They're all MSCI EAFE index.
> ...


All really fun ideas, except look up the ishare index. I think we’ve done most of these things just give them a more world view. Once I have the investments, I am usually able to draw connections in real life to show them the meaning.


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## Spudd (Oct 11, 2011)

VEQT is a global equity-only index, might fit the bill?


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## james4beach (Nov 15, 2012)

Plugging Along said:


> With the ETFs you mentioned, tax wise, are they easy to keep track of and report on for CRA. My question with the couch potatoe is are they as good in non registered funds. I had been reading and from what I read, it seemed that they are not recommended for non registered accounts due to


I think mutual funds are easier to deal with in non-registered than ETFs. The ETFs create more headache for "ACB" tracking and tend to include some strange distributions which need special handling. Personally, I only hold ETFs in my registered accounts because I have been frusted with the tax treatment of ETFs.

In a non-registered account, I think the TD e-series index funds (or any other mutual fund) are going to be easier than an ETF which is also described here
https://canadiancouchpotato.com/2017/01/26/ask-the-spud-can-i-make-taxable-investing-easier/

So I'm thinking you might be better off avoiding ETFs entirely. There are tradeoffs here between performance, fees, convenience and headache. For larger $ amounts the ETFs have the lower fees and highest expected performance. For smaller $ amounts the ETF fee advantage disappears. And ETFs always involve more tax reporting work; the mutual funds are generally easier to deal with.


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## humble_pie (Jun 7, 2009)

Plugging u know me well enough to know that i'd never be talking about investments that are bling, fuzz, faux, crud or glitzy. I just used the word sexy as a code word to represent appealing, but i'm happy to drop it & use another word if you like.

i was reiterating the old warren buffett rule: Buy what you Know. I was thinking that the best way for kids to learn is by doing. And by following the Sage of Omaha's advice, they'd naturally be drawn to the products that they're already using or consuming every day.

one can see that there's a niche opening here for cool investment products for pre-teens. There is a blogspot for older kidz called Hard Bacon, but nothing for ages 8-14.

i don't see why parents can't combine both approaches. Have some investment products in kidz' trust accounts that will generate zero tax for either kidz or parents.

but imho it's important to also have growth oriented investment products in kidz' investmount accounts because these are the models the kids will learn from. IMHO it's important that kids not be taught that the be-all & end-all of investment experience is tax avoidance. It's important they learn about earnings growth & sound management practices.


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## Plugging Along (Jan 3, 2011)

james4beach said:


> I think mutual funds are easier to deal with in non-registered than ETFs. The ETFs create more headache for "ACB" tracking and tend to include some strange distributions which need special handling. Personally, I only hold ETFs in my registered accounts because I have been frusted with the tax treatment of ETFs.
> 
> In a non-registered account, I think the TD e-series index funds (or any other mutual fund) are going to be easier than an ETF which is also described here
> https://canadiancouchpotato.com/2017/01/26/ask-the-spud-can-i-make-taxable-investing-easier/
> ...


Good info, this may be were I am heading. I was trying to avoid MF because of fees, but in this case I am more concerned with just getting the kids started in good habits For the small amounts, the fees in terms of an overall learning isn't too bad. Good tips in that article. I think I will start exploring some mutual funds.


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## Plugging Along (Jan 3, 2011)

humble_pie said:


> Plugging u know me well enough to know that i'd never be talking about investments that are bling, fuzz, faux, crud or glitzy. I just used the word sexy as a code word to represent appealing, but i'm happy to drop it & use another word if you like.
> 
> i was reiterating the old warren buffett rule: Buy what you Know. I was thinking that the best way for kids to learn is by doing. And by following the Sage of Omaha's advice, they'd naturally be drawn to the products that they're already using or consuming every day.
> 
> ...


I always appreciate your advice and know you give solid financial recommendations. I think I was stuck on 'sexy' as that has been a point of discussion in the area of clothing for my teen. I don't want her to have any sexy, but I get what you mean by investments. 

It's a good reminder about the goals is for growth and sound practices. I am less worried about avoiding taxes, but more worried about the tracking of ACB and such as I do a really lousy job, and cannot add much on to my plate. I want something simple that will get them in the habit of taking their saved money and making it grow. I can teach them taxes later.

Would you think MF and equities would be the direction I should research further?


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## humble_pie (Jun 7, 2009)

Plugging Along said:


> I think I was stuck on 'sexy' as that has been a point of discussion in the area of clothing for my teen. I don't want her to have any sexy, but I get what you mean by investments.



OIC. If i'd known the word resonated negatively for you i wouldn't have used it. I really did mean identifying quality investment vehicles among products the youngsters are already using, so they could transition into the world of costing, production, marketing, sales & earnings more easily.






> Would you think MF and equities would be the direction I should research further?



i thought mutual funds could be an ace avenue for you to take. It's jas4's suggestion, is it not?

there's the advantage that small quantities can be bought from time to time without commissions. There's also the advantage that some growth oriented smaller cap MFs seem - at least to me - to be slightly more personal, slightly more built on a small community scale, than ETFs.

would you be looking for growth funds? these are the ones more likely to hold stocks that kidz will recognize. The Nikes, the Apples, the Shopifys, the American Eagle Outfitters.

plus there's definitely a safety factor in a very small account of holding a fund rather than a couple of individual stocks.

IIRC jas4 has researched small cap growth funds, he might have some suggestions for you. There is one in my hood which i know jas4 doesn't include, but it has an awesomely long track record, is now & always has been very successful, counts a 3rd generation of loyal investors among its current clientele. In its half-century history i believe it's only had 3 presidents. 

its name is pembroke. I'll have another look at it, what i don't know offhand is whether it distributes low amounts of income while retaining growth capital within the fund itself, to be taxed later as capital gains (ie what you are looking for) 

this whole area of setting up trust accounts for a family's minor children is a niche that i don't believe is being developed. Yet it is an excellent niche that can be added to a family's repertoire of investments. Many infants & minor children are given cash gifts by relatives & some parents are also able to contribute the dollar amount of the child tax benefits they receive. 

these accounts are not RESPs of course but they are related. Certainly in the hands of a skilful & enterprising parent such as yourself they can become wonderful teaching modalities for young children.


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## Plugging Along (Jan 3, 2011)

> OIC. If i'd known the word resonated negatively for you i wouldn't have used it. I really did mean identifying quality investment vehicles among products the youngsters are already using, so they could transition into the world of costing, production, marketing, sales & earnings more easily.


No way for you to know. I normally don't get stuck on words like that. Just raising teenage girl stuff got me in a different head space. That's different forum.

I like the idea of quality investments, and I will not worry about the tax structure as much. This thread has been most helpful in focusing my thinking. 



humble_pie said:


> i thought mutual funds could be an ace avenue for you to take. It's jas4's suggestion, is it not?
> 
> there's the advantage that small quantities can be bought from time to time without commissions. There's also the advantage that some growth oriented smaller cap MFs seem - at least to me - to be slightly more personal, slightly more built on a small community scale, than ETFs.
> 
> ...


Yes, JAS4 mentioned above which has focused my thoughts better. I am interested in growth, so will be rephrasing this thread to growth investments in a non registered account for a minor. I really appreciate some recommendations for funds. I think MF may be a better option as my spouse has so many restrictions right now, it's a pain. 



> this whole area of setting up trust accounts for a family's minor children is a niche that i don't believe is being developed. Yet it is an excellent niche that can be added to a family's repertoire of investments. Many infants & minor children are given cash gifts by relatives & some parents are also able to contribute the dollar amount of the child tax benefits they receive.
> 
> these accounts are not RESPs of course but they are related. Certainly in the hands of a skillful & enterprising parent such as yourself they can become wonderful teaching modalities for young children.


I know many people wealthy people that are doing very well and have set up large trust funds for their kids and investing larger sum (five or six figures yearly) for their kids. Then the larger majority I know are working to max the resps and there is not much more after all the registered accounts. We are just some where in between. I guess that's why there is the informal trust accounts come in. There is not much out there for information in the niche of minors.

In my little rant in the teachers thread, it's can be really challenging getting kids interested in finances. If there was a way to show kids how their money could grow, and they could take an interest it would great. Right now, it takes a lot of work from the parents (not that I am complaining).


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## Plugging Along (Jan 3, 2011)

Apparently, I cannot edit the title. Here's where I am leaning now. I want to keep it simple using the couch potatoe TD E- series portfolio using the Aggressive Model portfolio.

TD Canadian Bond Index Fund - eTDB909 10%
TD Canadian Index Fund - eTDB900 30%
TD U.S. Index Fund - eTDB902 30%
TD International Index Fund - eTDB911 30%

I will start up with $10K for each kids account (they are set up in trust).

Any thing else I should consider?


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## james4beach (Nov 15, 2012)

Seems reasonable to me. One thing you may want to discuss thoroughly with the kids is the volatile nature of markets, and how they will swing up and down. Set the expectation that the value will change wildly over time, even showing big losses at times. It could be tough for kids, if they see losses building.

Plugging Along, this is very similar to how my dad started me out with investing (though I was a teenager at the time). He got me into an RBC Canadian Index fund with an RBC MF account. There weren't many index funds back then, before 2000. Using these e-series at a discount brokerage is much better! Definitely a step up from how I learned, 20 years ago.

I'm still very grateful to my dad for getting me into index funds (and GICs) so I could learn about all of this before I was an adult.


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## humble_pie (Jun 7, 2009)

Plugging Along said:


> Apparently, I cannot edit the title. Here's where I am leaning now. I want to keep it simple using the couch potatoe TD E- series portfolio using the Aggressive Model portfolio.
> 
> TD Canadian Bond Index Fund - eTDB909 10%
> TD Canadian Index Fund - eTDB900 30%
> ...




hellooo! hastiNote!!

Plug maybe a good idea to not do anything until after the TD index funds big reorg to Solactive indexes which is coming up real soon.

LTR alerted cmf forum to the likelihood that some of the big green index funds will have capital gains to assign as they exit out of their old (i presume S&P) indexes & switch to new security representation via Solactive.

a new investor entering under the old regime would be taking all those capital gains on the taxation chin although new investor will not have been in the funds long enough to have actually realized any of the gains in real dollar terms.

i think if you're going TD e-funds for your kids' trust account (a great choice imho) you want to get down & dirty to eyeball the situation very carefully, so that you will make your purchases only after the X date of any new post Solactive changes TD makes. Not all TD e-funds will be impacted.

i do believe the big green will be very diligent about issuing timely news releases to keep clients up-to-the-minute informed on all new developments, so you won't have difficulty navigating this changeover.

very nice thinking on your part so far, Plug. Do you realize you've inaugurated a new investment model for parents, whereby they can save tax $$ & educate their offspring at the same time. What are we going to call this cute new number?


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## lonewolf :) (Sep 13, 2016)

Playing poker for money is probably the best way to teach kids about the market. No more money then is put on the table then can be won & the money will flow to the strongest player just like in the market, Though a fee should be charged to play just like in the market.


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## Plugging Along (Jan 3, 2011)

james4beach said:


> Seems reasonable to me. One thing you may want to discuss thoroughly with the kids is the volatile nature of markets, and how they will swing up and down. Set the expectation that the value will change wildly over time, even showing big losses at times. It could be tough for kids, if they see losses building.
> 
> Plugging Along, this is very similar to how my dad started me out with investing (though I was a teenager at the time). He got me into an RBC Canadian Index fund with an RBC MF account. There weren't many index funds back then, before 2000. Using these e-series at a discount brokerage is much better! Definitely a step up from how I learned, 20 years ago.
> 
> I'm still very grateful to my dad for getting me into index funds (and GICs) so I could learn about all of this before I was an adult.


There have already been conversations about risk vs reward and volatility. It at seem odd, but I do want my child to be comfortable and embrace higher risks. In both investments and life. That’s a different conversation. They do understand that there will be ups and downs, I want them to be able to see it.

I didn’t really have the money to invest when I was a monitor so saw this stuff, but never got to apply it until out of university. Then I was pretty reckless. My goals for my kids are to teach them the best I can about different options then when they are.a little older they can continue their learning. Maybe they will be a whiz at options, calls and puts like HP, but I won’t be the one teaching them that. I have already taught them some about real estate and starting a business 

If they can creat a decent balanced portfolio, learn ways to creat passive income, or start a business that hits the homerun I will be happy. I have no idea what they will choose but I can only teach them some of the options.


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## Plugging Along (Jan 3, 2011)

humble_pie said:


> hellooo! hastiNote!!
> 
> Plug maybe a good idea to not do anything until after the TD index funds big reorg to Solactive indexes which is coming up real soon.
> 
> ...


I did not realize this. I found the other thread, and will wait until after Nov 7. 

Again, thank you and JAS4 for all of your information. I feel I have a reasonable plan now. 



> Do you realize you've inaugurated a new investment model for parents, whereby they can save tax $$ & educate their offspring at the same time. What are we going to call this cute new number?


I would called this parenting & investing by just plugging along. I am sure many other parents have done this, and it's basic enough they don't even think of posting. I don't know why I struggled thinking this through for so long.


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## james4beach (Nov 15, 2012)

Plugging Along said:


> Again, thank you and JAS4 for all of your information. I feel I have a reasonable plan now.


I'm happy to help



Plugging Along said:


> I would called this parenting & investing by just plugging along. I am sure many other parents have done this, and it's basic enough they don't even think of posting. I don't know why I struggled thinking this through for so long.


"Investing by just plugging along"... nice  You're doing more than many parents do on this, seems great to me!


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> ... similar to how my dad started me out with investing (though I was a teenager at the time). He got me into an RBC Canadian Index fund with an RBC MF account. *There weren't many index funds back then, before 2000* ...


Several of the TD eSeries funds being mentioned have start dates circa Nov 1999 and in 2000 so it would seem that both RBC and TD had them.


Cheers


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## Plugging Along (Jan 3, 2011)

Plugging Along said:


> Apparently, I cannot edit the title. Here's where I am leaning now. I want to keep it simple using the couch potatoe TD E- series portfolio using the Aggressive Model portfolio.
> 
> TD Canadian Bond Index Fund - eTDB909 10%
> TD Canadian Index Fund - eTDB900 30%
> ...


Just thought I would post one more time wit a quasi update. Haven’t done thing yet, only because it’s been insanely busy with taking care of my parents, the kids have had extra needs, and work. So my plan is to go for the following over the holidays unless any one has any reason not to jump in.


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## Plugging Along (Jan 3, 2011)

One update. I did a similar allocation for my extra tsfa in feb weeks before everything crashed. it almost even now, Any reason not to follow through with the kids now.


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## Plugging Along (Jan 3, 2011)

The youngest is interested investing- hurray - she has just over 15k, plus her Xmas money. I think I will break it up ver the next few months of $5k at a time. 


TD Canadian Bond Index Fund - eTDB909 10%
TD Canadian Index Fund - eTDB900 30%
TD U.S. Index Fund - eTDB902 30%
TD International Index Fund - eTDB911 30%


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## Tostig (Nov 18, 2020)

I just joined this discussion forum about a month ago, so I haven't had a chance to contribute to your thread. I had set up informal trust accounts for my kids too in addition to their RESP.

Here's one mistake I should have considered. Before capital gains gets too big, sell periodically, buy them back and pay the capital gains tax. That way, in twenty years' time, you won't be facing multiple holdings of $50,000 in capital gains each.


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## Plugging Along (Jan 3, 2011)

Tostig said:


> I just joined this discussion forum about a month ago, so I haven't had a chance to contribute to your thread. I had set up informal trust accounts for my kids too in addition to their RESP.
> 
> Here's one mistake I should have considered. Before capital gains gets too big, sell periodically, buy them back and pay the capital gains tax. That way, in twenty years' time, you won't be facing multiple holdings of $50,000 in capital gains each.


Good point, in my case, the kids are teens and I only have 3 and 5 years of gains before I turn over thier accounts. At that time, they will be transferring the investments to a TFSA. I don’t think there will be huge gains to consider.

also, the gains will be taxed in there hands, so it should be minimal even with the RESP Withdrawels.


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## Ponderling (Mar 1, 2013)

My oldest is 18, and so we have a tfsa for him and are actively draining resp to crystalize cseg funds. He is now 18K in with 17K VTI for us, XQB for cdn bond, and e- something for cdn eq and 1k for whatever was his idea. He has bought an egaming etf, and a few shares of FM.

We have read tgam stars and dogs out loud at the Saturday breakfast table with the kids for at least the last 10 years. that has at least taken some of the mystery out of investing, and made the learning a bit fun.


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