Starting an investment for a child in New Zealand — whether a newborn, toddler, or teenager — gives compound growth the maximum amount of time to work. Even small, regular contributions can grow substantially by the time they reach adulthood.
For most NZ parents: enrol your child in KiwiSaver (they receive the $521 government top-up from age 18) and open a managed fund account (Kernel or InvestNow) in a parent's or custodian's name for accessible savings. Contributions of $50/month from birth at 7% growth = approximately $23,000 by age 18, or $110,000 by age 30 if continued.
Option 1: KiwiSaver for Children
Any NZ resident under 65 can join KiwiSaver — including newborns. Children under 18 can be enrolled by a parent or guardian.
Key facts for children’s KiwiSaver:
- Government top-up: Children receive the $521.43 government member tax credit from age 18 (when they can make their own contributions)
- Employer contributions: Not applicable until they work
- Lock-up: Funds locked until age 65 (or first home, hardship, serious illness)
- Who opens it: Parent or guardian enrolls the child via a KiwiSaver provider
- Who contributes: Parents, grandparents, or anyone can make voluntary contributions to a child’s KiwiSaver
- Provider choice: All major KiwiSaver providers accept child members
Best KiwiSaver providers for children:
| Provider | Fee | Fund for long time horizon |
|---|---|---|
| Simplicity | 0.31% | Growth Fund |
| Kernel | 0.39% | High Growth |
| Milford | ~0.85% | Active Growth |
| Generate | ~0.97% | Focused Growth |
For a child with 50+ years to retirement: use a growth fund — 80%+ shares. The higher short-term volatility doesn’t matter over a 50-year horizon.
The compound effect of early KiwiSaver enrollment:
- $500 invested at birth, left for 65 years at 7% = ~$70,000
- $500/year contributed from birth to 18 (no employer) at 7% = ~$17,000 by 18, then compounds further
Option 2: Managed Fund Account (More Flexible)
KiwiSaver is locked until 65. For money you want the child to access at 18, 21, or 25 — use an outside-KiwiSaver managed fund.
Structure options:
Parent’s/guardian’s name (custodian account)
The simplest approach: open a managed fund account in a parent’s name, earmarked for the child.
- Tax: Taxed at the parent’s PIR rate
- Control: Parent controls the account until they choose to transfer
- Flexibility: Full — you choose when/how funds are used
Trust structure
A family trust can hold investments on behalf of children. More formal, requires a trust deed and trustee obligations. Generally only worthwhile for larger amounts (over $100,000) or complex family situations. Taxed at 33% trustee rate.
Child’s own account (16–17 year olds)
Sharesies and some platforms allow 16–17-year-olds to open accounts with parental consent. Under 16, a parent typically holds the account.
Best Platforms for Investing for Children in NZ
| Platform | Minimum | Suitable for | Notes |
|---|---|---|---|
| Kernel | $1 | Long-term growth, high growth allocation | Best app, $1 minimum, auto-invest |
| InvestNow | $250/fund | Diversified, multiple funds | Good fund selection, Foundation Series |
| Simplicity | $1,000 | Lowest fee (0.10%) | $1,000 min may be barrier for starters |
| Sharesies | $1 | Shares + funds | Can show child individual company ownership |
| Smartshares | $500 | ETF via direct account | Good for NZX ETF access |
For most parents starting small: Kernel ($1 minimum, 0.25% fee, excellent app, auto-invest) is the easiest starting point for a child’s managed fund.
What to Invest In for a Child
A child with 15–20 years until the money is needed suits:
- High growth allocation (80–100% shares): Time absorbs volatility
- Global index funds: Broad diversification — no stock-picking needed
- Low fees: Over 18 years, 0.10% vs 0.50% is a meaningful difference
Simple approach:
- Kernel High Growth Fund: 0.25%, one-click setup, auto-invest from $10/week
- InvestNow Foundation Series Total World: 0.20%, global equities, PIE
The Compound Growth Reality
$50/month from birth to age 18, at 7% annual return:
- Total contributions: $10,800
- Value at age 18: ~$22,000
$100/month from birth to age 18, at 7% annual return:
- Total contributions: $21,600
- Value at age 18: ~$44,000
If continued at $100/month from age 18 to 30 (7% return):
- Additional value at age 30: ~$65,000
- Total value at 30: ~$109,000
Starting early matters enormously. $50/month from birth generates more wealth than $200/month from age 10.
Tax: Investing in a Child’s Name
Under 16: Investment income in a child’s name is taxed at their marginal rate — but if their only income is investment income under ~$14,000, they pay 10.5%. Using a PIE fund: PIR of 10.5%.
Challenge: If a parent provides the funds, IRD may attribute the income back to the parent (income attribution rules). In practice, this mainly applies to dividends from private company shares, not PIE managed fund returns. PIE funds are generally not subject to income attribution for children.
Practical approach: For PIE managed funds held in a parent’s name (earmarked for the child), the parent pays tax at their PIR rate (typically 17.5% or 28%). This is clean and simple.
Gifts and Inheritance
If grandparents want to contribute:
- Gifting money directly to the parent’s managed fund earmarked for the child is simple
- NZ has no gift tax — contributions can be any amount
- Estate planning involving children’s investments should involve a lawyer for larger amounts
When to Transition Control to the Child
There’s no legal requirement for when to hand over. Common approaches:
- At 18: Hand over control of outside-KiwiSaver account; explain KiwiSaver exists
- At 21: For larger balances, give at a more financially mature stage
- Conditional: Some parents choose to release funds on milestones (completing study, buying a home)
There’s no right answer — consider your child’s financial literacy and maturity.