Welcome to the October 2025 Manager’s Perspective. Each month, InvestNow invites our investment managers to discuss our monthly theme. This month, we asked AMP some questions to help you better understand their investment styles, strategies, and perspectives on giving kids a financial head start. Read the questions and their responses below.

Q1: What is the single biggest benefit of starting an investment account for a child (compared to say traditional savings or cash gifts) and how substantial is the long-term impact?

As a parent or grandparent, you want to give the children in your life the best possible start. One powerful way to do this is by helping them build a financial foundation for their future. Setting up a long-term investment account can turn small, regular contributions into something much more meaningful over time.

The single biggest advantage a child has when it comes to investing is time. With a long time horizon, their money has years – even decades – to benefit from compounding returns. That means the returns from an investment can start earning their own returns, creating a snowball effect where growth builds on growth.

Here’s a simple example:

If you were to save a small amount in a standard savings account each month, after 18 years you’d have your total contributions plus a little interest. But if you invested that same amount instead, the potential returns could be much higher, thanks to the power of compounding.

Let’s look at the numbers.

If you invest $1,000 and add $20 each month, earning an average return of 5% a year, you could have around $9,200 after 18 years (compounded annually, before fees and tax). Even though you’ve only contributed $5,320, the rest comes from your money earning its own returns. It’s key to remember that returns are based on market performance, so the value of your investment can go up or down in this period.

It’s a simple concept, but over time, compounding can make a remarkable difference – turning modest contributions into a substantial financial head start.

While a child’s saver account is great for teaching the basics of money management, a child’s saver account vs investment for long-term goals often highlights the potential of compounding growth.

Q2: For a parent starting out, what key factors should they consider when choosing an investment option for their child’s long-term future, and what helps families stay committed to the plan through market ups and downs?

Getting started doesn’t have to feel overwhelming. The key is to make informed choices – and there’s plenty of support available. Talking to a financial adviser can help you find the right fit for your goals, and there are excellent free resources, such as Sorted, that can guide you through the basics. Most investment platforms and providers also offer helpful information online.

When exploring options like an investment fund for your child, here are some key things to think about:

• Ease of access: Decide when you’d like your child to be able to access the money. If the goal is to help with something specific – such as a first home or building a retirement nest egg – a KiwiSaver fund could be worth considering. If you’d prefer more flexibility and no set withdrawal rules, a managed fund might be a better fit.
• Comfort with risk: Everyone feels differently about risk. Your comfort level can guide the type of fund you choose, as each has a different mix of investments – from conservative to growth-oriented options.
• Understanding fees: It’s important to know what fees apply, as even small differences can add up and affect your long-term returns.
• Sticking with it through market ups and downs: Investing is a long-term journey, and market fluctuations are a normal part of that. Making regular contributions – even small ones – is one way to smooth out those bumps and keep your plan on track over time.

By keeping these factors in mind, you can choose an option that suits your family’s goals and helps your child’s investment grow steadily into the future.

Q3: Beyond the financial value, how can investments be used as a practical tool to teach kids about money and long-term thinking, and what’s a common pitfall to avoid when doing so?

Beyond the financial benefits, this is also a unique opportunity to teach children about money, patience, and goal-setting. As they get older, you can explain that they own a tiny piece of many different companies, helping make the concept feel real and exciting. It’s a practical way to teach the difference between saving (keeping money safe) and investing (growing money over time).

A common pitfall to avoid is focusing too much on short-term results. If children see investing as something to “win” or “lose” quickly, they can become discouraged when markets dip. The key is to emphasise consistency and long-term growth – that investing is a journey, not a race.

The information included in this communication is of a general nature only and does not constitute financial or other professional advice. Before taking any action, you should always seek financial advice or other professional advice relevant to your personal circumstances.  For financial advice, we recommend you contact your Adviser.

AMP Wealth Management New Zealand Limited is the issuer and manager of the AMP KiwiSaver Scheme.  For a copy of the AMP KiwiSaver Scheme Product Disclosure Statement, please visit amp.co.nz or contact Customer Services on 0800 267 5494.

Disclaimer

The following commentaries represent only the opinions of the authors. Any views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement or inducement to invest. All material presented is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice.

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