Buying crypto for kids as an early investment

The Undecided One

I've got this idea and wanted to see what others think about this, my kids have everything they need and more and don't need more plastic toys or another electronic gadget.

I have bought both my kids (9 and 11) some ADA and started staking it in separate wallets, using the money from communions and Christmas/birthday gifts. I did this after explaining to them about investing long term rather than spending money on sweets and stuff they have anyway.

What do all of you think about this, would you put it into other cryptos (Bitcoin, ether)?

My thinking is in years to come for the price of a few hundred euro they could have a nice sum towards college or their first car.

Do you agree or am I just a bad father playing roulette with their cash? 😉

BTW I have my separate portfolio of altcoins

LawBoy2018

https://www.boards.ie/discussion/2058212469/buying-crypto-for-kids-as-an-early-investment

I hope this is a joke... lol.

The Undecided One

https://www.boards.ie/discussion/comment/118001190#Comment_118001190

Why?

Atlantic Dawn

Roulette would be a better place for the money.

The Undecided One

https://www.boards.ie/discussion/comment/118001235#Comment_118001235

Why do you think that? Do you have any investments yourself?

Atlantic Dawn

https://www.boards.ie/discussion/comment/118001237#Comment_118001237

Yes plenty, not 1 cent in crypto though, nor will I ever have. There's no proper asset with crypto, it goes in and out of fashion with a tweet. Roulette wheel has more simplified structure.

The Undecided One

https://www.boards.ie/discussion/comment/118001238#Comment_118001238

Then can you advise where would be a better place for their money? thanks 🤙

Atlantic Dawn

https://www.boards.ie/discussion/comment/118001245#Comment_118001245

I'd look more towards steady stocks that have been around a long time that the kids will see in everyday life like Microsoft, Google, Ford, Volkswagen, etc to give them an interest, have a look at performance over the last few years as a guide. Also look at ETF's invested in the S&P500, the disavantage of the ETF is deemed disposal after 8 years and not as favourable tax as shares.

Grumpypants

https://www.boards.ie/discussion/2058212469/buying-crypto-for-kids-as-an-early-investment

It's a great idea but not ADA. I don't see it growing a huge deal (I have some so hopefully I'm wrong). So it would just be the interest.

But a better option would be ETH2. Even coinbase will give you 5% for staking and the potential for ETH over the next 2 cycles is great.

corglass

https://www.boards.ie/discussion/comment/118001400#Comment_118001400

Ford and VW are in desperate shape and likely to be bankrupt within the next 5-10 years. Best avoided

LawBoy2018

I can't believe you actually invested your children's money in crypto? You should have invested it in large cap equities, ETFs, bonds, etc.

HGVRHKYY

https://www.boards.ie/discussion/comment/118001543#Comment_118001543

Don't stake on Coinbase, don't they charge like 20% on your interest earned? Kraken would be a better option

topmanamillion

Surely a wind up?

Gambling with your kids birthday and Xmas money? Would love to see the updated thread in 5 years when you have to tell them you lost all their money and they haven't got to treat themselves to "plastic toys or electronic gadgets" (which is exactly why they've been gifted this money). Explaining then you were teaching them about "investing" because you thought you were Gordon Gekko should be interesting.

Also, the average return on a decent investment is around 5-6%. If they've very generous aunts and uncles and say there's a pot of €2,000. That's a return of around €100.

Tldr;stick it in one of the an post savings bonds or a decent managed fund if you fancy some risk. Put some or all of their children's allowance in if you can afford it and they'll have some nice savings if/when they head off to college in a few years.

HGVRHKYY

https://www.boards.ie/discussion/comment/118002728#Comment_118002728

"Or in a decent managed fund"

Such as?

I'd do this with whatever gift you were going to give them, I wouldn't be taking their communion money and doing it. But yeah a good idea overall. Diversify so its not all in crypto though.

jobless

not a bad idea to put some of it in Bitcoin.... ada like most of the other may not be around in 5 years...

topmanamillion

https://www.boards.ie/discussion/comment/118002964#Comment_118002964

Depends on the OPs risk appetite. This is a handy tool:

http://funds.irishtimes.com/

They say no more than 1% of your wealth should be in Crypto because its so volatile. So if we're talking of between €2-5k, you're talking €20-50 in Crypto because it is absolutely gambling and speculating. Crypto is a modern gold rush, and like the gold rush some people will strike lucky but for the majority it'll be a stinging life lesson in the end.

500,000 people in Ireland alone own some form of Crypto. They simply all arent going to be rich in 5-10 years.

Grumpypants

The top performing 5year fund in the that list had a 27% return. So after 5 years 1000 euro would have made you less than 300. Most of that would be gobbled up with annual fees.

1000 put in to bitcoin 5 years ago returned €85,000.

But sure you would be mad to put your money in crypto.

HGVRHKYY

https://www.boards.ie/discussion/comment/118005872#Comment_118005872

Yeah it's amusing to still such aversion to it to be honest. I'm not sure about ADA long-term, but BTC is definitely here to stay for at least most of this decade so personally I'd feel grand throwing at least some of my kids' savings into it, if I'd kids. I really just don't feel like it's some bizarre, crazy or stupid idea. Some of those funds would have fees that probably eat into the profits as well, and you're likely stuck with deemed disposal too

Grumpypants

https://www.boards.ie/discussion/comment/118006266#Comment_118006266

Yeah bitcoin or ETH. While I think ADA has potential if you just want to stick something away and leave it then bitcoin is prob the one that will outlive them all.

cnocbui

https://www.boards.ie/discussion/2058212469/buying-crypto-for-kids-as-an-early-investment

I would recommend Bitcoin or Ethereum, but nothing else.

https://www.boards.ie/discussion/comment/118001238#Comment_118001238

You sound like the current CEO of JP Morgan, Jamie Dimon, who in 2017 famously called his daughter an idiot for buying two whole bitcoin, while saying:

"... that the only people he would expect to be using the digital currency are drug dealers and murderers."

A few days ago JP Morgan put out a note to investors saying it looked like 'institutional investors' were turning to Bitcoin in preference to gold as a hedge against inflation.

You couldn't make this stuff up.

As to his daughter being an idiot - which he brayed to the whole world like any great dad would - BTC would have been around $2000 when Dimon stuck his foot in his mouth, so his daughter might have paid less than that, but lets say it was $2 K per coin. Dimon's 'idiot' daughter, selling those coins right now, would have made a $109,786.78 profit on a $4 k investment.

You and Dimon are singing off the same page about there being no real asset/intrinsic value: "Jamie Dimon, JPMorgan Chase chairman and CEO, remains a skeptic of bitcoin, the largest cryptocurrency by market value.

“It’s got no intrinsic value..."

He said that a few days ago, despite JP Morgan putting out an investment note declaring institutional investors were diving in.

The ones and zeros on bank hard drives that represent your money have no intrinsic value, and most were created out of thin air on the whim of a bank - which is what fractional reserve banking does. As for assets with no backing, try the stuff the US investment sector practically invented and runs on - derivatives: https://www.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization-2020/

Scroll right down to derivatives and then tell me again BTC isn't backed.

I have investments in various assets, but my joke BTC investment has outperformed all of them by thousands of percent.

TheAnalyst_

One of the dumbest things I’ve ever read but standard for a crypto bro.

I bit the bullet two weeks ago and invested 50 bucks into BTC. Three days later it was worth 60 bucks. 20% increase. Damn! Why didn't I put a thousand in?

Looking at it now, my original 50, that went up by 20%, is currently worth 46 bucks. If I'd cashed out when it hit its peak, and bought when it was in its trough, I'd probably be up quite a bit now. As it stands as of this moment, I'm down 4 bucks.

As a past time, being down 4 bucks for a weeks entertainment(watching the markets, doing research, deciding whether to cash out or not).

When I was much younger, I had a ghost portfolio, with a 'virtual' few thousand invested. I bought and sold shares, going just by the closing value in the newspaper and updating my balance in a ledger. After about 3 months, I had about the same amount.

cnocbui

https://www.boards.ie/discussion/comment/118006641#Comment_118006641

Me dumb crypto bro. Me only up over 3,500% on bitcoin. Wish had put bitcoin seed in equities instead. Equities up 16%. Me stupid.

TheAnalyst_

https://www.boards.ie/discussion/comment/118006764#Comment_118006764

I won 100k on the lotto. I’m an investment genius.

circadian

https://www.boards.ie/discussion/comment/118001238#Comment_118001238

Blockchain technology has massive potential. Granted there are plenty of shitcoins but just as with any investment, do your research.

I buy based on potential innovation, just like I would with regular tech stocks.

topmanamillion

https://www.boards.ie/discussion/comment/118005872#Comment_118005872

And a €1000 investment in Amazon 20 years ago would be worth in excess of €600,000. My point stands.

We'd all be millionaires if investing was done retrospectively. The reason so few make it big is because its a very difficult thing to do. By the time your average joe soap hears about investment opportunities its probably already too late.

The difference being stocks like Amazon have underlying revenue and management structures that add value to their stock price. There is absolutely nothing bar supply and demand keeping Crypto valuable.

Unearthly

Huge amount of money to be made if you know what you’re doing. Most don’t and fall victim to volatility, negative press, lack of understanding, and impatience.

I’d only do it if you’ve been in the market yourself for a few years and are streetwise to the pitfalls most fall into

Oat23

https://www.boards.ie/discussion/comment/118007415#Comment_118007415

Just avoid sh*tcoins and buy & hold coins with a purpose like BTC & ETH using whatever money you have spare. I know nothing about investing yet I'm still up 5000% since 2013. It's not hard to make money in crypto as long as you don't trip yourself up thinking you're Warren Buffett.

Obviously looking forward you're not making a 5000% return with an investment in 2021 but you will likely still make a decent profit if you leave it for a few years.

I know there are guys day trading crypto who think they are geniuses but my return by doing nothing dwarfs what they have made over the years.

circadian

https://www.boards.ie/discussion/comment/118009679#Comment_118009679

This is generally the way to do it with small trades, buy and hold or if you can, DCA. How many booms and crashes have their been since 2013? I went a few years of not even checking my BTC amount because I sold what I had to and knew I wasn't selling what I have left, it just sits there in my Trezor. Same with a lot of my ETH. I have no intention in selling these for another 10 years at least unless there's some insane boom where I might have to take profits to pay for renovations.

Unearthly

https://www.boards.ie/discussion/comment/118009679#Comment_118009679

That’s the thing though, most won’t do this. They will fomo into high prices, they will panic sell, they will buy scam coins, they will sell a coin because it hasn’t moved in a month and buy a coin that pumped that month, they will listen to media reports that it’s **** and going to zero, and miss great entry points at low prices

circadian

https://www.boards.ie/discussion/comment/118001400#Comment_118001400

Aren't ETFs a nightmare for tax reasons here? I was always under the impression they were a pain in the hole to deal with when doing your returns so I've avoided them.

Some ETFs payout dividends regularly, which you then have to pay tax on. Others accumulate and these are easier to do returns for. You also cannot offset losses onto gains from different ETFs. Honestly, I don't know why you'd suggest ETFs to the OP, while a lot of crypto is speculation (as is the stock markets these ETFs are created from) it's at least a bit easier to get your head around.

dirk_dangler

https://www.boards.ie/discussion/2058212469/buying-crypto-for-kids-as-an-early-investment

This is the saddest post i have read in a long time, why in the name of God would you want to steal your children of their joy and wonderment? Let them blow their communions and Christmas/birthday gifts money on what ever they want, they are children, there will be plenty of time as adults to worry about money, Let them have fun and spent it all on what ever they want, they will only be young and innocent once.