2023-12-19 13:55:00
Invest Wisely for Your Child’s Future
When it comes to investing for your child’s future, making the right choice can make a significant impact. The rules of investing in the stock market are seemingly simple – invest for the long term. Over time, investing in shares provides an excess return over the bond market and the solid market in general. Many studies support this and they point to an average annual return of 6%-7% while the solid market yields an order of magnitude of 4%. The conclusion of the studies is that if you invest for the long term, then the timing is not important. At the end of the road, you will earn.
It is hence advised to invest more in stocks at a younger age. While stocks do come with the risk of potential declines, the long-term nature of this investment allows the portfolio to correct itself. This brings us to savings for children, a state savings program that gives each child NIS 55 a month for savings. Parents can double the monthly deposit, which can potentially grow to NIS 30-40 thousand by the time the child reaches 18 years old.
Parents have several investment options ranging from high to low risk. It is important to understand that the investment house you choose will have a significant impact on your returns. The Analyst investment house leads in the average annual return with 10% in the last five years, making it an attractive option for those seeking higher returns.
However, it’s crucial to consider the risks. While high-risk investments can yield high returns, they also come with a higher chance of losses. Therefore, it’s essential to find the right balance between risk and returns when choosing an investment route.
Another popular option is bank deposits. While they may seem like a secure option, the returns on these investments are the lowest compared to other investment options. Except for Discount Bank, which provides a fixed interest rate of 4.73%, as well as other competitive rates for different risk profiles.
Yaniv Katzir, product manager of the deposit department at Discount Bank, encourages investment in a savings plan for every child at an attractive interest rate that gives them a significant starting amount of money when they reach the age of 18. He emphasizes the flexibility and various investment paths available with Discount Bank, providing customers with a comprehensive and convenient investment solution.
In conclusion, investing in your child’s future is a serious decision that can have lasting impacts. Carefully selecting the right investment option, considering the risks and returns, can make a significant difference in your child’s future financial well-being.
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