Episode 013: Toddlers Take Risks Every Day — So Should Their Portfolios

My toddler is fearless. She constantly requires a “heeyyy wenza ntoni!?" (hey what are you doing) shout, every 3 seconds, because she is constantly searching for ways to just hurt herself. Toddlers climb onto unstable chairs, leap off couches, test boundaries, and explore the world with an optimism that most adults lose as they grow older. Parents spend half their day saying “be careful,” yet ironically, when it comes to investing for these same toddlers, they often hesitate to take any risk at all.

Here’s the truth 

Your toddler has something you don’t as an adult, time! Decades of it actually. And time turns risk into growth. This is why when it comes to investing for them, over the long term (let’s say for university fees), you must never apply your everyday risk minimisation, it is a recipe for disaster.

If your little one is brave enough to explore, stumble, get up, and try again, then their investment portfolios deserve the same courage. With a long runway toward goals like university, early investing in growth-oriented ETFs is not reckless, it’s being responsible. It’s how we give their natural boldness a financial meaning.

Firstly, for my toddler (banana, I call her) – all her investments are in a Tax Free Saving Account, because there is absolutely no way she’s going to be this young and already be owing money to the tax man anything and when she is older – all those capital gains cannot be split between her and tax!

Risk and Time Horizon

The other day, banana was playing with a little tiny spider – zero fear, it was just another “thing” in her eyes. Guess what happened, immediately as me and my wife saw her play with it, we hit her with another “heeeeyyyyy”, basically applying our own fear/thought of spiders. Now, she has some fear of spiders and this is good and bad because on the one side she probably will not play with a very dangerous spider while on the other, we probably took away some of her fear factor. What is funny now (or not) is that she even wants to run and smash out an innocent ant because it’s also a spider to her.

When looking at investing, as an adult – you should never ever approach it the same way as you would be thinking about your own investments and time horizon. Toddlers have an extraordinary amount of time ahead of them, so you can never apply your fear of time and risk, on their investments. To address your fear about your baby’s future investment; know that markets move in cycles.  Short term? They jump, dip, wobble, and confuse everyone. Long term? They trend upward. So, when it comes to investing for your little one, know that a toddler starting today (or few years ago) has 15–20 years before they need university money, and possibly 30–40 years before they tap into longer-term investments. This means only think about LONG TERM & TRENDING UPWARDS when it comes to their investment. Ok?

What would a Toddler Do?

It is insane to me how banana tends to let her sometimes-intrusive thoughts take over and then ends up just doing their craziest of things. The other day, I was cooking while she (after saying NO to her so many times) found her face on the floor from sitting on the edge of the couch. She stood up, in shock & then literally 2sec later after I gave her a hug & checked if she hurt herself – this girl was back to fighting me to go back sit on the edge of the couch, again. This is literally an equivalent to someone who is investing in an asset class that has just hit a proper drawdown but they still looked away and went about their life & they were quite right because things moved on and that same asset class came back up & still made profit.

Step by Step – for Parents?

You can say that toddlers are actually Resilient – which is what you should think of when it comes to their investments, stay invested even during downturns. They are very Curious creatures as well and I recommend that you also do this by exploring broad markets when it comes to investing. Lastly you need to be Confident and Patient. These little ones are definitely confident with their wrong decisions, face planting included – though sometimes their patience is tested and you can see that from them throwing tantrums - oh the terrible twos!

Right after banana got her birth certificate, this is what I made sure we do:

-            Open a TFSA for her

-            Picked a few core ETFs

-            Maximized flows into her account (best of our ability) for every tax year

-            I review semi-annually to see if I am still happy with the allocation of the ETFs

So far, she has had almost 2 years of her tax free investments and over that period, she has gained 37%. Her current allocation? See below:

As at the end of October 2025.

Why this allocation?

Let’s start with the local exposure. There are 3 sector ETFs listed on the JSE and she holds two. Firstly, if I just look at total returns (dividends reinvested) alone, in the last 15-20 years, the local Industrials (which in this case the Satrix INDI ETF) is far more superior than the other two (Financials & Resources), even outpaces the All Share index (the market), yet it averages a lower volatility when compared to the same two sectors. It is in fact the “backbone” of our economy, if you really zoom into what stocks are held in that ETF. This is why she holds it, so in other words – she holds the “best chance” of extracting the highest local returns from an index tracking ETF, according to history anyway.

Now, let’s go back to the “taking risk” part. If there is any sector that swings in returns – that sector would be Resources. This ETF (Satrix RESI) made it into the portfolio because of that & when I got it for her, it was actually rock bottom in terms of price action. The reason why it’s huge in the portfolio now is actually just on it running so hard (80+ %returns, ever since it made into the portfolio). This is definitely not a long term hold like the INDI, so whenever I review and there is a good opportunity, I do trim on this position.

Bravery With Your Investment Choices for Them

Toddlers show us every single day that growth comes with trial and courage, and so their portfolios should reflect the same outlook. My approach for banana’s portfolio is very much “Risk Friendly”, in other words her portfolio is just constantly keen for risk.

To me, High-Growth ETFs are the risk-friendliest ETFs you can ever hold. Offshore equities, Tech, Emerging Markets are the theme for the rest of her portfolio. This is why she holds the Emerging Markets ETF, Nasdaq and the S&P500 ETFs.

Toddlers are constantly trying to break their necks essentially and you have to be there to prevent any of that disaster, every second. But when it comes to this type of portfolio & their investments, I would not recommend checking it daily. I can tell you for free that the next time I will think about how this portfolio looks like, will be when I log in to maximise her TFSA again in the next tax year.

It is important as a parent that if your child is born and you start thinking about things like - I wonder how much a “Be the best parent” book is, already – just that thought makes you the best possible parent to your child, it is always in the little things/thoughts. So, when it comes to investing, just by registering and making sure that you have a flow of money (what you can afford) into your child’s investment account, that makes you the best investor-parent out there. Make sure you maximise the TIME in the market for your child.

Well, that’s it for this blog – I sincerely hope that 15 years from now you will be like “banana’s dad was right on that blog” as you will have enough in your child’s investment account to not worry about the stresses of tertiary funding! Also, imagine – when your child gets a bursary & there’s this big lumpsum in his/her TFSA and you don't have to use any of it any longer for university fees – ENDLESS possibilities!