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Sri Lanka Equity Forum » Stock Market Talk » Investment/Saving for kids

Investment/Saving for kids

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1 Investment/Saving for kids on Wed Mar 28, 2012 5:03 pm

Monster

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Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
This topic is not directly related to the share market. However, this topic may be useful to the parents, who are planning to invest for their children.

I am planning to invest/save my hard earned money for my two kids. Still both of them of them are younger than five years old. They should be able to utilize when they reach 18 years old. What would be best investment plan?

1). Fixed Deposit
2). Real Estate
3). Buy a land and plant teak or mahogany trees.
4). Share market - Solid shares where I can hold it for another 15 years.
5). Gold

Each and every options has advantages and disadvantages. I would appreciate your valuable comments.

2 Re: Investment/Saving for kids on Wed Mar 28, 2012 8:30 pm

econ

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Global Moderator
you can add life insurance policy as a another option.


_________________

--------------------
This is not buying\selling recommendation. Do your own analysis before take any decision

3 Re: Investment/Saving for kids on Wed Mar 28, 2012 8:43 pm

rijayasooriya

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Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Fixed deposit in a trustable bank is my option.

4 Re: Investment/Saving for kids on Wed Mar 28, 2012 8:45 pm

early


Manager - Equity Analytics
Manager - Equity Analytics
15 years is a long time. All 5 investement options are good. But some options carry almost zero risk whereas some others are more risky. However the more riskier options have the potential to give a higher return in the future.
The best investement advice would be to distribute your savings among 3 or 4 investement options, with the major allocation towards the least risky option.
However with regard to your particular situation we have to be a bit more selective. Since this is hard earned money for your kids, you are not in a position to take much risk. Therefore Fixed Deposits and Real Estate which generaly carry close to Zero risk could be the options for you.
How ever if you have the time and energy to closely monitor your investements right throughout, you may invest a portion in other investement options as well.

Cheers.

5 Re: Investment/Saving for kids on Wed Mar 28, 2012 9:39 pm

UKboy

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Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Hi Monster,

Few months ago someone opened a nice tread regarding the same thing you are after. If I can find it I will stick it here. As Econ said a life insurance can also be considered.

It’s quite difficult to predict what will happen in 15 years times. The whole world is highly depending on crude oil price and remaining oil reserves. This trend will not be changed at least for couple of more decades for sure.

If I’m in your position I would put at least 20% of your investment as fixed deposit. (in 3 different banks).

Then I would buy a bare land in an area where land price has not risen dramatically in last 3 , 4 years but with huge potentials. I believe some areas in Gampaha district has that character I’m telling. Ex Ganemulla. If the planned highway system & expansion of the Katunayake Airport materialised, the land prices should go up in Gampaha.

As you know share markets are always riskier than above two options. I would not invest more than 10% in shares. Mostly in strategically diversified companies.

If I still have some money I would buy some gold and make sure to keep the receipts with it. Many people believe that gold prices will go up all the time. But its not. Imagine a country discover a large scale brand new gold mine in coming years? Also there are plenty untapped gold reserves in countries like Saudi Arabia.

Econ’s point is a very good one. I think you dont need to pay for these life insurances at once?

6 Re: Investment/Saving for kids on Wed Mar 28, 2012 9:42 pm

smallville

avatar
Associate Director - Equity Analytics
Associate Director - Equity Analytics
Fixed Deposits - Today's FD yields are far more better than stock market returns, if you invest a considerable amt of money on a FD for 5 years time u nearly get abt 50-70% return of your capital at a rate above 14%..

NDB - 14% on 24 months FD.
LOLC - 14% - 14.75 for 12 months - 60 months FD
COMB - 12.95 on 48 months FD.

Real Estate - Will be a Good investment on future development areas, a feasibility stud y to be done before investment. The infrastructure development may be a key point to consider when u evaluate the anticipated development.

15 years is a not so prudent time frame for me.. May be 5 years is a more practical option for share market investment... Better to evaluate share market cycles and sell early on a unexpected downfall (like now) Wink

7 Re: Investment/Saving for kids on Wed Mar 28, 2012 10:06 pm

WildBear


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@Monster wrote:This topic is not directly related to the share market. However, this topic may be useful to the parents, who are planning to invest for their children.

I am planning to invest/save my hard earned money for my two kids. Still both of them of them are younger than five years old. They should be able to utilize when they reach 18 years old. What would be best investment plan?

1). Fixed Deposit
2). Real Estate
3). Buy a land and plant teak or mahogany trees.
4). Share market - Solid shares where I can hold it for another 15 years.
5). Gold

Each and every options has advantages and disadvantages. I would appreciate your valuable comments.
It's always good to focus on income generating investments especially if you are go for long term.
I would prefer following
-Stocks with good dividend payout ratio
-If you go for real estate, Buying a rentable property would generate regular income rather than a bare land
-FD can give you a regular income.

If you get regular yield, you can reinvest them creating more wealth over 15 years.

8 Re: Investment/Saving for kids on Wed Mar 28, 2012 11:07 pm

Monster

avatar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Thanks guys for your valuable comments.

- I have already invested considerable amount in real estate in an urban city during last 5 years. As you all told, it's a safe investment. But unfortunately it's still not income generated property. I have to develop it further to make it a rentable property. However, based on current market valuation, I have gained smart unrealized capital gain.

- Still land value is low in my remote village. I can purchase few acres and plant teak or mahogany. There won't be much maintenance cost until it mature. Initial cost would be for the land ( obliviously land value too will go up) + planting cost. Probably it will take 15 - 18 years to mature. If anyone have any idea, please share with me.

- Agree, it's not practical to predict share market for another 15 years. But still it won't be a bad idea, if I could invest around 10% in a solid diversified company, which has minimum risk ( Ex: JKH, SPEN, HHL, EXPO)

- I have no idea about an insurance policy, which I need to study.

9 Re: Investment/Saving for kids on Thu Mar 29, 2012 1:26 am

manula


Vice President - Equity Analytics
Vice President - Equity Analytics
@monster.. what happen to the your plan.. about recycling issue...hope with rupee devaluation you have high cost for the equipment's...
Though the land is not generated income still..but it will be a sound investment for the future and value will be increased every year and will be good safe investment for the kids... There is no depression in the land value and you can get extra income if you can converted to the rent able property.
I am also interested of plantation as mentioned earlier and teak and mahogany will be a better option than other plantation mainly for me no one in SL to look after the crop. This teak and mahogany will required minimum care when plant in small days and after that not much attention required and for 15-18years and can have a good gain...including the land. As discuss with you earlier plantation will be a good plan also when one day we came to SL after retirement. Same time one of my friend start building few apartments in Negambo mainly targeting the foreign management workers in the Free trade zone and Air port or tourists... Hope that also better but cost will be little high...

10 Re: Investment/Saving for kids on Thu Mar 29, 2012 10:26 am

NewInvestor

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Manager - Equity Analytics
Manager - Equity Analytics
This may not applicable for you. But it depends when you can invest,isn't it. Whether you can invest all at once at the start or incrementally. If its incremental, know a guy saving in Investment plan which you have to deposit small fixed amount throughout all these years which interest rates are higher than normal savings account. And other guy buys around 100 shares monthly from shares like RICH or EXPO.

11 Re: Investment/Saving for kids on Thu Mar 29, 2012 11:46 am

Monster

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Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@manula, I have not given up that idea. It's still on my mind, but postponed it to another year. I have to spend high cost for the equipments due to sudden rupee value depreciation. I will execute it on right time. As you stated, rupee value depreciation and current economy situation make me to rethink my settlement plan in Sri Lanka. We should never feel that we have taken a premature decision once we settled. I will feel more comfortable, if I can stay two more years here.

@NewInvestor, I am planning invest some bulk amount once and increase it monthly basis. For incremental investment fixed deposit and share market would be ideal.

12 Re: Investment/Saving for kids on Thu Mar 29, 2012 1:29 pm

suja


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Hey this is a great topic, I feel land apprx 5 KM radius to colombo with a view of water (Lake) is the best. Are there any areas in which you guys feel that the land prices will go up in the future. Gampaha (Ganemulla) is already identified thanks for that.

13 Re: Investment/Saving for kids on Thu Mar 29, 2012 4:37 pm

NewInvestor

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Manager - Equity Analytics
Manager - Equity Analytics
@suja wrote:Hey this is a great topic, I feel land apprx 5 KM radius to colombo with a view of water (Lake) is the best. Are there any areas in which you guys feel that the land prices will go up in the future. Gampaha (Ganemulla) is already identified thanks for that.

What about Hambantota Very Happy

14 Re: Investment/Saving for kids on Thu Mar 29, 2012 5:00 pm

glwking

avatar
Manager - Equity Analytics
Manager - Equity Analytics
How about investing on Touchwood. According to touchwood, each tree would cost you around 30,000/-. In just 12-15 years you would return of 500,000/-. It looks attractive, but how can we trust these companies?

http://www.dailynews.lk/epaper/art.asp?id=2012/03/29/Pg15_2&pt=p&h=

15 Re: Investment/Saving for kids on Thu Mar 29, 2012 6:31 pm

illuminati


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
I am glad that a timely topic is out deviating from the usual bull talk. What I do is constant rotation of funds. Your funds should not be permanently tied to any instrument. They should be rotated in all available investment options like land, stocks, gold and deposits. When a sector is looking very weak, like stocks at present your funds should be in deposits. Land is also not a bad idea at present as the prices appears to have bottomed out after peaking. Easier said that done! Gold I would not touch now.

16 Re: Investment/Saving for kids on Thu Mar 29, 2012 6:33 pm

illuminati


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@glwking wrote:How about investing on Touchwood. According to touchwood, each tree would cost you around 30,000/-. In just 12-15 years you would return of 500,000/-. It looks attractive, but how can we trust these companies?

http://www.dailynews.lk/epaper/art.asp?id=2012/03/29/Pg15_2&pt=p&h=

Don,t mislead people. This is a scam operation like pyramid schemes. Never touch these companies.

17 Re: Investment/Saving for kids on Thu Mar 29, 2012 7:22 pm

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
Dear Friend, said earlier, i will go with the Insurance Policy as an option when considering the economic situation now, since you are in the mind of 15 years investment plan, check with the insurance companies for 15 year policy, also since you are in a position to pay the go for annual paying premiums, where you can save some amount on premium.

At the moment banks have investment plans where you can put the deposits as ur wishing frequently and ur children will be able to withdraw at the end of the investment period

18 Re: Investment/Saving for kids on Thu Mar 29, 2012 10:45 pm

glwking

avatar
Manager - Equity Analytics
Manager - Equity Analytics
@illuminati wrote:
@glwking wrote:How about investing on Touchwood. According to touchwood, each tree would cost you around 30,000/-. In just 12-15 years you would return of 500,000/-. It looks attractive, but how can we trust these companies?

http://www.dailynews.lk/epaper/art.asp?id=2012/03/29/Pg15_2&pt=p&h=

Don,t mislead people. This is a scam operation like pyramid schemes. Never touch these companies.
My intension is not to mislead others. I just wrote what news paper advertisement says in today's daily news. Therefore, this news paper advertisement mislead others.

Any way, thanks for your information.

19 Re: Investment/Saving for kids on Thu Mar 29, 2012 10:50 pm

manula


Vice President - Equity Analytics
Vice President - Equity Analytics
@Monster wrote:@manula, I have not given up that idea. It's still on my mind, but postponed it to another year. I have to spend high cost for the equipments due to sudden rupee value depreciation. I will execute it on right time. As you stated, rupee value depreciation and current economy situation make me to rethink my settlement plan in Sri Lanka. We should never feel that we have taken a premature decision once we settled. I will feel more comfortable, if I can stay two more years here.

@NewInvestor, I am planning invest some bulk amount once and increase it monthly basis. For incremental investment fixed deposit and share market would be ideal.

@monster.. I think.. rupee depreciation effect will take some time to recover.. may be more than year.. I am also thinking to stay for some more years but thinking send family back to SL for the kids higher studies.

same time what if we try for like some wealth management funds in HSBC with US $.. Hope world wide bank is better than SL banks and $ account will be fine for the money growth prospectus. Heard SL government banks also in crisis due to heavy lending.

20 Re: Investment/Saving for kids on Thu Mar 29, 2012 11:35 pm

UKboy

avatar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@Gaja wrote:Dear Friend, said earlier, i will go with the Insurance Policy as an option when considering the economic situation now, since you are in the mind of 15 years investment plan, check with the insurance companies for 15 year policy, also since you are in a position to pay the go for annual paying premiums, where you can save some amount on premium.

At the moment banks have investment plans where you can put the deposits as ur wishing frequently and ur children will be able to withdraw at the end of the investment period

Can someone please let us know more details about these insurance policies. I always wanted to have one but never had a chance to look deeper.

Who gives the best rewards say... in 10 or 15 years? Can we pay just one off payment for a life insurance or at least once a year? or does it have to be a monthly payment?

(I wouldnt consider a small insurance company in this case)

Your info is much appreciated.

21 Re: Investment/Saving for kids on Thu Mar 29, 2012 11:48 pm

manula


Vice President - Equity Analytics
Vice President - Equity Analytics
@Gaja wrote:Dear Friend, said earlier, i will go with the Insurance Policy as an option when considering the economic situation now, since you are in the mind of 15 years investment plan, check with the insurance companies for 15 year policy, also since you are in a position to pay the go for annual paying premiums, where you can save some amount on premium.

At the moment banks have investment plans where you can put the deposits as ur wishing frequently and ur children will be able to withdraw at the end of the investment period

@Gaja..why you are thinking about the insurance policy... for like 15y.. surely after 15Y you will get the monthly income..but valve of the money that time???.. what about land if possible.. at least you can grow what you want for food with extra income..after retirement also will be active with your garden. This is my thoughts only..

22 Re: Investment/Saving for kids on Fri Mar 30, 2012 8:51 am

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
@manula wrote:
@Gaja wrote:Dear Friend, said earlier, i will go with the Insurance Policy as an option when considering the economic situation now, since you are in the mind of 15 years investment plan, check with the insurance companies for 15 year policy, also since you are in a position to pay the go for annual paying premiums, where you can save some amount on premium.

At the moment banks have investment plans where you can put the deposits as ur wishing frequently and ur children will be able to withdraw at the end of the investment period

@Gaja..why you are thinking about the insurance policy... for like 15y.. surely after 15Y you will get the monthly income..but valve of the money that time???.. what about land if possible.. at least you can grow what you want for food with extra income..after retirement also will be active with your garden. This is my thoughts only..

Friend i agree with the time value of money, and the returns from the Insurance is comparably lower than other investment, but it has its own benefits and negatives as well, when u consider the insurance as investment consider other options as well, such as the benefits on the hospitialisation, educational related benefits etc.

Kindly note that i am not connected with any insurance companies as well as we don't have any insurance companies as our clients

23 Re: Investment/Saving for kids on Fri Mar 30, 2012 9:55 am

WildBear


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@UKboy wrote:
@Gaja wrote:Dear Friend, said earlier, i will go with the Insurance Policy as an option when considering the economic situation now, since you are in the mind of 15 years investment plan, check with the insurance companies for 15 year policy, also since you are in a position to pay the go for annual paying premiums, where you can save some amount on premium.

At the moment banks have investment plans where you can put the deposits as ur wishing frequently and ur children will be able to withdraw at the end of the investment period

Can someone please let us know more details about these insurance policies. I always wanted to have one but never had a chance to look deeper.

Who gives the best rewards say... in 10 or 15 years? Can we pay just one off payment for a life insurance or at least once a year? or does it have to be a monthly payment?

(I wouldnt consider a small insurance company in this case)

Your info is much appreciated.

You can choose pay annually,bi annually,quarterly or monthly premiums according to your wish and it can be pre arranged.
SLIC have paid return of 12-15 % p.a. during last couple of years and they decides where to invest.
some companies like Aviva-NDB,UAL give you the choice of investing various instruments like stocks,Treasury bills,bonds according to your choice and some times allow us to rotate the asset class time to time. Biggest advantage of a life policy ahead of a conventional investment is it gives you a life cover and accident benefit/health cover when disabled, and paying some extra premium you can increase this death/accident cover enormously.

However we need some knowledge about insurance to analyze pros and cons of policies among various operators and that's why insurance penetration is still low among Sri Lankans when compared to other countries. However it would be prudent to go for a giant insurance company who can withstand financial storms. following are the top 5 in life insurance business according to market share.

Ceylinco-27.9%
Aviva-NDB-22.39%
SLIC-19.19%
Union-12.73%
Janashakthi-5.31%

24 Re: Investment/Saving for kids on Fri Apr 20, 2012 1:12 pm

sajcolombo


Equity Analytic
Equity Analytic
Hi All,

Interesting topic.

i have an idea to invest in a land in remote area and set up a mahogany plantation.

Appreciates if anyone could let me know what are the challengers and how and where could i get the relevant info which related to the above.

Also appreciates your advice if anyone have any practical experience in mahogany/teak plantation......

Your valuable views/advice always welcome.

Thanks.......

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