This article is broken into two sections, how Luna works and who it is for and the process for applying for and managing an account on behalf of a minor.

Luna is a model portfolio available via Rask Invest set up specifically for those wanting to invest on behalf of children. It’s a portfolio designed to be held for the very long-term and even passed on to the child for them to continue their investment journey when they are an adult.

Anyone can invest in the Luna portfolio but the intention is for adults on behalf of children. The Luna portfolio is designed and will be managed in the mindset of the owner being a child paying a high tax rate. This means we will manage the portfolio differently to the other Rask Invest options.

Luna is invested growth assets such as Australian and international shares using exchange traded funds (ETFs) with little to no exposure in defensive assets (cash and bonds). Because of this the recommended investment timeframe is very long (12+ years). There is a 1% cash balance and that is to ensure the fees are covered without the need to sell down any of the holdings to cover the fees.

Compared to the other Rask Invest portfolios, the aim of Luna is to rebalance only when it is absolutely necessary. As Luna is designed to be invested in for minors who pay high income tax any future transactions could trigger a significant tax event. As managers we are incredibly aware of this and the effect it has on an investor's total return.

Instead of set rebalance periods investors own dollar cost averaging (contributions) will be used to maintain the portfolios balance. For example, the starting model for Luna is 60% international shares, 39% Australian and 1% cash. This model is fixed. When you invest your account weights will float. Hypothetically your Australian percentage could drop to 35% and international increase to 64%. The new cash coming into your portfolio from dollar cost averaging will be allocated to your Australian component with the aim of aligning your account with the original fixed model.

This is why we suggest Luna is best suited to those investing for the long-term and want to use a dollar cost averaging approach.

When considering Luna we asked ourselves, “how do we invest for our family members?” At no point have I considered holding a percentage of cash and bonds in my child’s portfolio. I am actively contributing to it and intend to continue doing so for 20 years. At that point I intend to hand it over to him to form the foundations of his investment portfolio moving forward. Turning 18 isn’t the end of the portfolio, it’s just the beginning.

With this in mind, and thinking deeply about the tax consequences for children, we believe that a child’s investment isn’t something you just slot in with a traditional high growth, growth or balanced investment. A traditional portfolio would see unnecessary capital gains events being generated from rebalancing. Whilst this may be prudent for someone’s superannuation or an adult's growing nest egg, the potential tax events for a child can be highly detrimental to the investments total return.

So, whilst someone can invest for a child in our Rask Jupiter, Martian or Terra portfolios these portfolios are not managed with a child’s tax consequences in mind. This is why we created a stand alone portfolio, whilst others simply allow you to open an account on behalf of a child using the standard mix of investment options. Why wouldn’t they have a stand alone kids option? Because they’re not profitable. We lose money on each account that is less than $10,000. But, it’s incredibly important to us as fund managers and parents to have this option available for our community.

The short answer is no. However, Luna is managed with the intention of investors adding on a regular or irregular basis due to the way the portfolio will be (or not be) rebalanced.

The intention is for investors' contributions to go to the underweight position in the account. This way the account will be gradually rebalanced in time by adding to one position over another rather than selling down one ETF to add to the other.

The short answer is because we lose money on every account that has a value of less than $10,000 due to the cost of administration and tax reporting.

It was incredibly important for us to make this investment option as accessible as possible and that is why we have placed the minimum investment amount at $5,000. Out of an abundance of caution we have chosen to limit the amount of sub $10,000 accounts to ten per month. As the Rask Invest business continues to grow we will be able to remove this limit.

If we have reached our quota for the month and you submit an application for less than $10,000 we will email you to let you know your application has been placed on the wait list. As soon as we enter the next month your application will be approved and you will be sent funding instructions.

It will also require either the adult/s or the minor to provide their Tax File Number (TFN) and accept tax liability for the investments held. The ATO site has some useful examples when it comes to who pays the tax on these investments.

Please consult your tax professional if you have any doubts over which option will be best for your circumstances.

We will require the adult/s to provide the following details to act as trustee.

We will require the following details for the minor:

Can I have multiple kids account under one login?

Yes.

You can have multiple kids accounts under your login (e.g. you administer the portfolios for Child #1, Child #2, Child #3, etc. within your Rask Invest Account).

However, there is a quirk...