How to almost set a child or grandchild up for life with $46 per week
Written and accurate as at: May 20, 2025 Current Stats & Facts
Let’s pretend a parent or grandparent contributes $200 per month into an index fund portfolio for their child or grandchild from age 0 to age 18. Tough, but not unachievable.
By the time the child turns 18, the parents or grandparents will have contributed $43,200. Because they invested it rather than merely earning interest, it will likely have grown. At a fictional annual return of 7% per year, the portfolio would be worth just over $84,000 when the child turns 18.
Now for where it gets really powerful. Because the great thing about investing early for a child isn’t really the balance at 18 years old. It is the superior use of time.
This is because the nature of compound interest dictates that your annual growth in dollar terms towards the end of a long holding period is far, far bigger than that in the earlier years.
Consider an investment of $10,000 that is held for 40 years. If I falsely assume linear growth of 7% per year, here is how the annual increase in value snowballs throughout the holding period:
| Year | Annual increase in value | Total Value |
| 1 | $700 | $10,700 |
| 10 | $1,286 | $19,671 |
| 20 | $2,531 | $38,696 |
| 30 | $4,979 | $76,122 |
| 35 | $6,984 | $106,765 |
| 40 | $9,796 | $149,744 |
Annual dollar increases in value over time. Source: Morningstar
Earning an extra $10k on your principal used to take ten years. After forty years of compounding, it only takes one year. In the last five years, the value increases by $43k. The first increase in value of that size took over twenty-four years!
Getting to this level of the compounding relies mostly on time.
This is something you can’t buy back but can make sure your children or grandchildren make the most of, even if they don’t know it. Starting them off early opens up investment time horizons and compounding possibilities that most people simply don’t have access to.
Like to know more and see how much your regular investments could be worth in the future, call me or drop me an email, I will be pleased to help.
