The gift of inheritance vs a smaller investment early. Discover how generational wealth can be created by investing for kids early; with just $15k investors could build a $1.2 million nest egg, thanks to the power of compounding.
The inheritance dilemma: help later or a small helping hand early?
A recent report revealed that the average inheritance in Australia is now $706,806, typically received at the age of 55. That’s a significant boost, but is it arriving too late?
By 55, most Australians are past major financial milestones: buying a first home, raising children, building a career. An inheritance at that stage might help with retirement planning, but it’s unlikely to change the trajectory of someone’s life.
So here’s the question: Would your money go further if you gave it earlier, and let time and compounding do the heavy lifting?
$15,000 at birth vs $700,000 at 55
Let’s compare two very different approaches to building wealth for your children. Long term investing a smaller value vs lump sum gift:
| Scenario | Initial Investment | Investment Term | Assumed Return Rate (p.a.) | Assumed Return Rate (p.a.) |
| Gift at birth | $15,000 | 55 years | 8% | $1,204,052 |
| Inheritance at age 55 | $706,806 | 0 years | – | $706,806 (no growth) |
With no further contributions, just $15,000 invested at birth could grow to be worth more than the average inheritance received at age 55, an inheritance that typically takes decades of saving, property growth, and asset accumulation to build.
That’s the power of compounding, letting your money grow exponentially over time. A small amount invested early can do more than a large amount invested late.
Don’t give your kids an inheritance, spend your money on yourself
Maybe you’re dreaming of that luxury yacht when you retire, and who could blame you? Many parents have uttered the threat, ‘I’m going to spend all your inheritance,’ on occasion.
But with the bank-of-mum-and-dad, largely being the only springboard to help Australians reach their dream of homeownership, amongst other financial obligations, many parents are feeling that they need to help their kids get ahead; instead of speeding away into retirement in a supercar.
If you invested just $6,806 (less than 1% of the average inheritance), left untouched for 55 years at 8% per annum, it could grow to $546,318, all without impacting your lifestyle or your plans for retirement.
That means you could:
- Take financial strain off yourself in retirement, enjoy your money knowing you have a nest egg growing to support your children.
- Still leave your child half a million dollars
- Do both with only a small upfront investment
What this means for generational wealth
Too many families delay wealth transfer until the very end of life, missing the opportunity to create intergenerational financial momentum earlier.
Starting with just a modest amount, and giving it time, can:
- Help your children with future life milestones
- Teach them about investing and compounding
- Be far more impactful than a late lump sum
This is why we believe long-term, low-cost investing is one of the best gifts you can give. You don’t need to be wealthy. You just need to start early and stay consistent.
How to start early investing for your child
If you’re considering giving your child a financial head start:
- Open a low-fee investing account for them (like a Stockspot Kids account)
- Invest a small amount early
- Let time do the work
Even if you only invest once, that single deposit can grow to hundreds of thousands over decades. No stress. No stock-picking.
Did you know? Stockspot’s Kids Accounts are fee-free until your child turns 18 or hits $10,000. That means more of your money stays invested and grows over time.
The Bottom Line?
An inheritance at 55 is a great gift and a lasting legacy, but helping early is better, for you and them. Thanks to compounding, a small investment today could become a life-changing amount in the future.
You don’t need to give everything away, but starting small and early could be one of the most impactful financial decisions you make for your loved ones future.
