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Better to open a crypto account or savings account for my children?

10 points by rose_daniel ↗ HN
Hi, I am a young dad who starting to save for my kids. I was wondering whats the smarter play - Should I set up recurring payments into a tax-sheltered savings account (e.g. junior ISA in the UK) or get a crypto wallet and start saving Bitcoin? The idea is that I can get them a head start about learning about the space as they get older and have an initial investment. On the other side, there is a natural downside risk of the volatility of the asset. Curious to hear your thoughts!

33 comments

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tboyd47
Print a paper wallet from https://www.bitaddress.org and transfer some Bitcoin to that wallet. Write the amount on the wallet and give it to them in a envelope.
randomhodler84
No. Don’t use paper wallet. Use a standard software wallet and save the seed phrase words somewhere real safe. Paper wallets are too easy to mess up the change address for new users.
randomopining
hard wallet is best. like ledger nano x
tradertef
That is until their system is hacked and your e-mail, name, and address are leaked to web.
csomar
That doesn't affect your crypto.
tradertef
True, but you get an awful amount of spams and some people will fall in to that. Also, knowing that your name / address and the fact that you are interested in bitcoin is not good.
randomopining
I agree. And if I could've done it over again i would've used all burners. Maybe next time I will.

But overall, I don't see how there's any danger besides the code being stolen or lost.

tboyd47
That only comes into play when they decide to spend the money. And even then, it's not a huge deal. Just use Electrum.

On the other hand, you have to be somewhat crypto-literate to setup and install a software wallet. So the barrier to entry is higher. That's why paper is such a great option for gifts.

And if you're trying to encourage financial prudence, the extra obstacles in spending from paper are a plus, not a minus.

Beached
ISA is definitely the safer more traditional bet.
JohnWhigham
I would not entrust more than 10% of a portfolio to crypto, especially if its horizon is over a decade out.
randomhodler84
I would not trust more than 10% to fiat, it’s a weak money that bleeds value every year due to debasement. It is the worst thing for a savings account. What you think is a lot today will be worth little to your child. That is the curse of fiat. With Bitcoin, a lot today is a much larger amount of value in the future.
cpach
The general advice is not to park one’s money in a savings account.

The general advice is to park one’s money in an index fund.

Let’s say one buys AAPL stock or the Vanguard Total Stock Market ETF – in what way is that to invest in fiat?

matty22
Open a brokerage account and put small amounts into whole market index funds each pay period. That way you are nearly guaranteed to have something in there in 10-15 years. There's really no way to know if BTC will be worth 0 or 100k/coin in that time period.
3guk
I think a JISA (if you are in UK) with Vanguard is probably the best way to go with things - given the amount of time you'll have it open for you'll most likely see fairly decent returns.

The Vanguard Lifestrategy funds get recommended time and time again - basically pick your risk level / fund and then it's pretty much set and forget.

I guess there's nothing stopping you from putting a small amount into crypto but I certainly wouldn't want to bet my children's future on it.

paulcole
Put it all into crypto.

Losing their entire investment due to volatility/risk is the best possible head start into learning about the space.

tata71
If this is the way, then buy SHIBA INU!
sircastor
Go with a traditional system. Governments are obligated to protect these simple financial systems because normal people (voters) have put their money into them. It’s going to be another generation before crypto advocates are deep enough in established federal roles to legislate protections and advantages for crypto - also, I suspect that we’re going to see another “wave” of new coins before things settle down for the long haul.

(These are of course, just my opinions, and I’m very much just a spectator for the crypto stuff)

GoldenMonkey
A generation? Where have you been? El Salvador adopted bitcoin. Visa and Mastercard enabled it. Tesla has bitcoin on it’s balance sheet… momentum is everywhere for blockchain.

Unless government kills it off… it will be embedded in 5-10 years max.

sircastor
At least a generation before the US government is willing to back some sort of Bitcoin thing the same way it’ll insure a savings account through FDIC (for instance) and by generation I mean that people like you (I assume, people who are Crypto enthusiasts) are sitting in the US senate and Oval Office.
frankfury
Defi space is pretty popular nowadays; you can try and stake stablecoins for a fixed payment that is slightly bigger than banks. Please do your research about this one; it's not volatile as stables are pegged to $1.
unclickable
Blockchain will be more embedded in the life of your child in the future, same as you can't imagine living now without internet. Finance is only one side of that. You can also look into https://plush.family who just opened a pilot with a goal to help new parents with blockchain strategy besides investment.
randomhodler84
Buy as much BTC as you can now and then Dollar Cost Average into it over time. Keep stacking. Ignore the price. Send to the wallet and forget.

Give the kid the money at 18 or 21. Kid will never need to work again.

tata71
Probably add a couple of steps to ensure your 18 year old doesn't become an entitled shitbag.
kbelder
Yeah. Give it to the kid when they turn 35. They'll hate you when they're young, thank you when they're older.
llampx
The time I could have most used a windfall was between 25-30. Old enough to know not to waste it all, young enough to be able to get a leap forward on life.
tata71
Onto something.

Spacing it out can work, too.

sealeck
An ETF is probably the better option.
high_byte
I work in blockchain company. considering the high volatility and rapid changes I'd say you should probably diversify. avoid shit tokens, buy coins (eg. bitcoin, ethereum, litecoin, etc.) and also stocks sound like a better long term investment plan.
matt_s
I don't think (at least in US) a minor can legally own crypto. A brokerage account for a minor can be done and throwing money into full-market ETF's every year (probably better to dollar cost average a monthly deposit) would accomplish the goal of giving them a nest-egg. This would also be in their name with you as the guardian. A typical brokerage account has a lot of knowns when it comes to taxes, gifts, estates, etc. but crypto has some unknowns as far as future legislation is concerned. There are rumblings of more crypto regulations, etc. so those could adversely impact the value if for example heavy regulation could mean large firms pull out billions affecting price? or maybe not?

This sparks a random thought about crypto and estates/wills - how does that work? Is it basically - whoever has the secret for a wallet owns it? How would a split of an estate work to 4 people?

robga
Cash for anything > 5 to 10 years is def not the way to go.

For a kid I'd put it all in some form of All World tracker 100% equity. If you eenvisage they'd actually draw on it aged 18-25 I'd scale back to 70/30 with bonds/gold/cash/whatever.

oriettaxx
since a child is involved, and so education (he will get money thanks to an evident dad smart action), you may think it this way:

when he'll be an adult your investment will end up:

* with good returns, but with a bad message for him: a bit like gambling

* loosing money: not good for your cashflow (but good as a life lesson, haahha)

GoldenMonkey
Whatever you do, do not put it in cash/savings.

In the US, inflation is at least 15%.

And the US has printed 40% of all money ever printed… in the last 12 months.

Safe bets are guaranteed losers to inflation.

And inflation is picking up rapidly.

I think you will find Michael Saylor’s reasoning enlightening… of why microstrategy was forced to embrace bitcoin.

https://youtu.be/-cx1Am2UFCA