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Nimi's Standard: Saving for your children
Stanbic IBTC team
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Have you heard about the Xbox One? The Samsung Galaxy S4? Surely, you know every cool kid has an iPod?

The latest gadgets and phones top gift lists all over the world causing financial headaches for many parents. Such gifts are appropriate but take a little time this Children’s Day to explore ways of giving your children gifts that keep giving.

Investing in a child's economic wellbeing is one of the most fulfilling actions a parent can take. When it comes to saving, children have a huge advantage over adults; the earliest gifts have time to grow and they can benefit from the magic of compound returns.

The traditional Nigerian naming ceremony presents a good opportunity to jumpstart a saving scheme for a child, so try not to spend all the loose change that you receive! Take a portion of token cash gifts during family visits or for birthdays and add it to their savings.

There are several savings and investment schemes developed with children in mind. Many of these offer interesting features aimed at children of ages ranging from birth to say 18 years, your key concern however, should be the best interest rate and investment performance whilst of course ensuring that the funds are placed in a stable, strong institution.

The stock market is generally regarded as the best option for saving for the long-term; in the shorter term it can be volatile. If your plan is to put money away for your child for a long time, say, five to ten years, then it is well worth considering investing in a stock market mutual fund. These pooled investments give access to a wide range of shares and so spread the risk.

If a parent invested a sum of N50,000.00 in the Stanbic IBTC Nigerian Equity Fund on behalf of a child at birth on 27 May 2003 and this parent also had the knowledge, foresight and ability to continue to invest the same sum of N50,000.00 on the child’s birthday each year. On 22 May, 2013, just before the child’s 10th birthday, the investment with inflows totalling N500,000.00 would be worth N901,956.02, almost doubling it! This shows the importance of long term capital appreciation where such funds are placed in an appropriate investment product.

Can I hear you say what a wonderful gift this could have been?

Sadly, with little or no personal financial instruction in schools, most children do not learn significant lessons until they are adults. Most people only learn these from their own successes and failures but bad habits can be developed early and can last a lifetime.

An American study showed that where financial education covering subjects like budgeting and credit was introduced, 45% of those involved started saving or saving more after just three months.

Most parents don't deal with their children’s money management issues until the children are adults. By then, any problems can be both costly and emotionally charged as parents resent having to constantly bail their teenagers and young adults out of financial troubles.

Children will learn to manage money through their own experience and the guidance from adults. They learn from trial and error as well as role models. Be a good role model. Children are more likely to be good savers if you set a good example.

Nimi is the founder and Chief Executive Officer of Bestman Games Ltd who recently launched the City of Lagos Edition of Monopoly, the first African city edition of the world famous board game. Before Bestman Games, she enjoyed a successful banking career spanning 23 years first at Stanbic IBTC, where she rose to the position of Head, Private Banking and Director of Stanbic IBTC Asset Management Limited, and later at Barclays Bank