New Vanguard Kids’ Account

Hi Scott,
 
Vanguard has recently released a new product, the Personal Investor Kids account. It starts with as little as $25 and offers a regular savings plan. However, Vanguard ETFs are not available within the account, only their managed index funds. Considering that managed funds are generally outperformed by ETFs, is it still worth creating an account for my five-year-old son?
 
Lina

Hi Lina,
 
Your question makes me feel like I’m at the breakfast table at 5am.
 
It’s like you’re my two-year-old arguing that his Wheaties taste better in his favourite Bluey bowl. (I’ve had this argument way too many times.)
 
Lina, you are buying exactly the same index, and the exact same stocks. In fact, Jack Bogle (who founded Vanguard and pioneered index funds) favours managed index funds over ETFs, as they are less prone to trading.
 
What matters is that you invest. And that you then casually reinforce the investing lesson by reminding your five-year-old of all the companies he owns shares in (“You’re a part-owner in Woolies … and Coles … and Macca’s!).
 
Go on, plant that apple tree!

Scott.