So after following Step 1 you now have an account open with a discount brokerage in which to build your Child Millionaire portfolio.
If you haven’t opened an account yet then stop reading this post, return to Step 1 and take immediate action.
Ok, now that the brokerage account is set-up we need to fund the Child Millionaire portfolio that we are going to build.
The first questions you might ask yourself are: How much can I afford to contribute to my child’s portfolio? Or alternatively, how much will my child need to become a millionaire? Or perhaps even, where am I going to come up with the money?
How much you can afford is a personal question with a sliding scale from pennies to millions based on your means. How much you will need to contribute to make your child a Child Millionaire depends on the time horizon available and the probable rate of return.
Let’s set both questions aside for you to consider at a later point and look at how you can fund a Child Millionaire portfolio without cutting into your pay. We are going to do this by simply allocating the tax-free child benefit that you receive for your child to the portfolio.
In the UK, the base amount that every child’s parent receives for a first born is £20.30 per week (paid every four weeks) equalling £87.97 per month or £1055.60 per annum. There are additional child benefits available depending on circumstances but let’s ignore them and focus on the universal child benefit all families receive.
In Canada, the base amount varies by province and other factors such as income and eligibility for additional supplements and could range from say $75 to $300 or more. For a middle income family $140 a month ($1680 per annum) is probably characteristic, so similar to the UK.
In the USA, alas there is no child benefit / baby bonus but there is a tax credit allowing for a refund of up to $1,000 from tax paid on income.
Few readers are actually likely to need child benefit money to get by on a day to day basis. More likely than not it goes into your bank account every month and gets spent without a second thought. If you don’t have access to a benefit or it is insufficient then you can almost certainly come up with a similar amount (£88 / $140 per month) by cutting out take-away coffees, fast food, smoking or some beers at the pub.
For the quick and easy Child Millionaire portfolio, we are going to funnel the child benefit into the brokerage account and add nothing else. Thus for the remainder of this series I’m going to assume that you fund your Child Millionaire brokerage account to the tune of £87.97 per month (£1055.60 per year) or the equivalent of about $140 per month ($1680 US or CDN per year).
Set-up an automatic monthly payment from your bank account into the brokerage account equal to the child benefit (or an equivalent amount) on the same day you receive the benefit or get paid. If you can afford to contribute more then go for it, but for the quick and easy Minting a Child Millionaire Series let’s assume you simply allocate the child benefit to the portfolio and add nothing else.
Do it NOW!