ETFs for children's scholarship fund
ETFs for children's scholarship fund
Hi guys!
My sister and I recently became parents at the same time.
We were thinking of investing a part of our savings in a scholarship fund for our children.
This means that our time horizon would be roughly 18 years.
Given that this time horizon is perhaps a bit longer than for an average investor, what do you think our asset allocation should be?
My initial idea was to make it simple and invest everything in FTSE All-World UCITS ETF (VWRL), but I am open to other ideas as well
My sister and I recently became parents at the same time.
We were thinking of investing a part of our savings in a scholarship fund for our children.
This means that our time horizon would be roughly 18 years.
Given that this time horizon is perhaps a bit longer than for an average investor, what do you think our asset allocation should be?
My initial idea was to make it simple and invest everything in FTSE All-World UCITS ETF (VWRL), but I am open to other ideas as well
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Re: ETFs for children's scolarship fund
EDIT: I am writing all this assuming there are no tax complications, such as US citizenship, or particular tax issues raised by the ETF you are proposing.MrCurious wrote: ↑Wed Aug 04, 2021 3:46 am Hi guys!
My sister and I recently became parents at the same time.
We were thinking of investing a part of our savings in a scholarship fund for our children.
This means that our time horizon would be roughly 18 years.
Given that this time horizon is perhaps a bit longer than for an average investor, what do you think our asset allocation should be?
My initial idea was to make it simple and invest everything in FTSE All-World UCITS ETF (VWRL), but I am open to other ideas as well
I would go with that. Simple & straightforward.
The alternative or supplement would be a small cap ETF, global. Historically small cap stocks have outperformed large cap stocks, but there's all kinds of reasons why that might not reoccur. It's certainly the case that when any anomaly (contradiction to the theory that the best portfolio is the one which indexes against the broadest possible index) is discovered and published about, its outperformance is then reduced. This certainly happened with the "small cap effect" in the early 1990s.
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Re: ETFs for children's scholarship fund
Thank you both!
I was initially thinking of overweighting some of the following: Small Cap, Europe, Emerging Markets, or Clean Energy.
However, at the end of the day, I still believe that the simplicity that comes from owning a single fund has a number of advantages.
Given that both my sister and I are leaning towards ESG, we might choose a slightly different fund: Vanguard ESG Global All Cap UCITS ETF.
It has a 0,02 percentage points higher cost and doesn't contain sin stocks and fossil fuels. Still, I believe that it will have a similar long-term return as FTSE All-World.
I was initially thinking of overweighting some of the following: Small Cap, Europe, Emerging Markets, or Clean Energy.
However, at the end of the day, I still believe that the simplicity that comes from owning a single fund has a number of advantages.
Given that both my sister and I are leaning towards ESG, we might choose a slightly different fund: Vanguard ESG Global All Cap UCITS ETF.
It has a 0,02 percentage points higher cost and doesn't contain sin stocks and fossil fuels. Still, I believe that it will have a similar long-term return as FTSE All-World.
Re: ETFs for children's scholarship fund
The Rational Reminder podcast as an episode describing why ESG are non-optimal investments - or at least not as good as a plain world stock ETF.
The basic idea is that investors are willing to pay more because the assets are ESG regardless of underlying factors like revenue, costs, ... This leads to future lower returns.
I'd stick with all world stock.
The basic idea is that investors are willing to pay more because the assets are ESG regardless of underlying factors like revenue, costs, ... This leads to future lower returns.
I'd stick with all world stock.
Re: ETFs for children's scholarship fund
On another area, from an accounting perspective I understand why the scholarship fund should be separate from your portfolios.
If you are able to keep your accounting on a spreadsheet you should be able to lower your fees by keeping the scholarship funds as part of your general portfolio (assuming you have a 2/3 fund portfolio).
If you are able to keep your accounting on a spreadsheet you should be able to lower your fees by keeping the scholarship funds as part of your general portfolio (assuming you have a 2/3 fund portfolio).
Re: ETFs for children's scholarship fund
Why not a 529 plan? Great way to save/invest for your children's college plans.
Most 529s also have a range of investment options but maybe put $$ in the "vehicle" (aka 529 plan) and then let that help you choose the "gas type" (aka actual investment/mutual fund/wtf)
Most 529s also have a range of investment options but maybe put $$ in the "vehicle" (aka 529 plan) and then let that help you choose the "gas type" (aka actual investment/mutual fund/wtf)
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Re: ETFs for children's scholarship fund
VWRL makes perfect sense - just own everything.
Barring any tax reasons, VWRA might be just a smidge simpler, since you don't need to reinvest the dividends. Returns should be exactly the same since the hold the same assets, just one is accumulating and the other distributing. That's aside from any transaction fees on dividend reinvestment, or tax differences on dividends vs capital gains.
Barring any tax reasons, VWRA might be just a smidge simpler, since you don't need to reinvest the dividends. Returns should be exactly the same since the hold the same assets, just one is accumulating and the other distributing. That's aside from any transaction fees on dividend reinvestment, or tax differences on dividends vs capital gains.
Re: ETFs for children's scholarship fund
Congratulations!MrCurious wrote: ↑Wed Aug 04, 2021 3:46 am Hi guys!
My sister and I recently became parents at the same time.
We were thinking of investing a part of our savings in a scholarship fund for our children.
This means that our time horizon would be roughly 18 years.
Given that this time horizon is perhaps a bit longer than for an average investor, what do you think our asset allocation should be?
My initial idea was to make it simple and invest everything in FTSE All-World UCITS ETF (VWRL), but I am open to other ideas as well
I just wanted to add to those who said to buy the acc version that reinvest dividends, rather than the distributing one.
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