Investing for babies involves knotty trade-offs
ATIENCE, CONSISTENCY and frugality are fine habits for an investor. They are not, however, common virtues among newborn babies. The little bundles of joy are impulsive short-term thinkers. They are also some of nature’s biggest freeloaders, living entirely beyond their means.
All the same, for new parents with a soft spot for the magic of compounding, like your columnist, a baby presents a tantalising investment opportunity. Many decades of life and potential returns stretch out into the future: $1,000 invested today with a real annual return of 5.2% (the average for global stocks over the past 125 years) would be worth $58,000 by the time the child is 80.
