Savings Account for a child

redman

Having trouble finding a suitable account with a reasonable interest rate that I can have friends/family lodge money into for our youngest (2yrs old).

We have an An Post savings account for the Childcare allowance but it doesn't allow any other additions into it. Very Frustrating :mad:

Any recommendations?



Thanks

Redman

jayok

Hi Redman,

I too was in the same boat and spent quite a while looking around. Basically, I looked at An Post and while it seems like a good idea , I found I could get a better return elsewhere.

To cut a long story short I took a deposit a/c with northern rock that I use to acculumate and funds that the yound lad receives - this includes the child allowance. Once there's enough money in there I usually buy shares and certificate in some blue-chip companies that makes up his investments. I am currently holding these in both my wife and own's name, but we are holding them in trust for him.

If the calculations go to plan and I get 5% growth for the next 18 years, I should hopefully have €120k for his 18th b-day - should cover college fees!

Each to their own, but this is the strategy I took for my little one.

redman

Thanks for that jayok, you clearly put quite a bit of thought in that.
I'll check out Northern Rock (I presume the account for that is also in one your names?)

Redman

jayok

Hi Redman,

The account and shares are actually held in the name of my wife and I. Again we are holding this in trust for him. The problem I see it is, while he small and cute now when he hits 15ish he could be a nightmare teenager (well if he's like his Dad anyway) and I would not like him to have access to such funds then until he gets some common sense. That way we control what the money is spent on (e.g. education, braces, or whatever) until we reckon he's old enough to be responsible for it.

Nothern Rock is one account, but Rabodirect also are competitive.

Cheers.

Tazz T

I don't see the point in setting up the children's savings account you see about. Best just open an account in your own name with Rabobank and pay the money into that for the child, then transfer out into one of their invesstment funds when there's enough in it.

Our child's grandmother lives in the North and has a ISA for her (6.25% last time I looked).

MrPudding

Would it not make sense to use the AnPost account for the child benefit and have another, NR or Rabo, for other money? The AnPost account offers serious interest does it not?

MrP

celt2005

Up Red,


Since we are dealing with incrementally low sums, would you not put into Quinn Life freeway funds ????


They have very low charges , and over 15+ years will outperform bank accounts ....


Have done this for my god child

jayok

MrPudding wrote:

Would it not make sense to use the AnPost account for the child benefit and have another, NR or Rabo, for other money? The AnPost account offers serious interest does it not?
MrP

Errr... not really, from the website:

After every 12 months the total amount of the Direct Credit lodgements involved will begin to earn interest at the following cumulative rates:

* 2.0% after year 1
* 4.0% after year 2
* 6.6% after year 3
* 10.0% after year 4
* 15.0% after year 5

So after 5 years you'll get an average of (15% / 5) 3% pa over the 5 years before DIRT - Rabo / NR offer 3.2% and give better flexibility.

Quinn Freeway and other options are simply strategies for growing the funds, over 15+ years will they outgrow bank accounts? They should do, just watch the charges

MrPudding

jayok wrote:

So after 5 years you'll get an average of (15% / 5) 3% pa over the 5 years before DIRT -

Can you explain this further please? I am not well up in these things.

After the 5 years do you get 15%? Surely this is very good?

Assuming 15% means 15% assuming CB stays at €141.60 (which it won't) and you take nothing out of the account you would have €99k+ in the account after 16 years. This is not too nad considering there is absolutely no risk involved. I know it is not as flexible as rabo but you can take money out with seven days notice which is not too bad. You could put money from relatives into the rabo account and use it to pay for braces and the like.

Have I got this completely wrong? I am seriously interested in this as I have two kids and want to work our the right thing. Your method is very interesting but I like simple. Is there any capital gains issues with the shares you would be giving to your kids?

MrP

jayok

Well it's all about their clever wording - you do not get 15% on all your money in year 5, just your contributions. So annual contributions are €1,699.20 for the child benefit pa

Year 1 = €1,699.20 @ 2% = 33.98
Year 2 = €1,699.20 @ 4% = 67.96
Year 3 = €1,699.20 @ 6.6% = 112.15
Year 4 = €1,699.20 @ 10% = 169.92
Year 5 = €1,699.20 @ 15% = 254.88

This is a CAR of about 2.6%, not bad but not briliant either. No interest is payable for the first 5 years but it's a DIRT rate after year 5.

This reminds me of current marketing brochures "Earn 12% over 5 years!", give us 10,000 and in 5 years we give you 11,200 less dirt. So after 5 years you give me 1,200? Hmmm....

The An Post thingy isn't bad, don't get me wrong, but I personally found the lack of flexibility and also that rates are going up I'm gonna get a better CAR off Northern.

MrPudding

jayok wrote:

Well it's all about their clever wording - you do not get 15% on all your money in year 5, just your contributions. So annual contributions are €1,699.20 for the child benefit pa

Year 1 = €1,699.20 @ 2% = 33.98
Year 2 = €1,699.20 @ 4% = 67.96
Year 3 = €1,699.20 @ 6.6% = 112.15
Year 4 = €1,699.20 @ 10% = 169.92
Year 5 = €1,699.20 @ 15% = 254.88

This is a CAR of about 2.6%, not bad but not briliant either. No interest is payable for the first 5 years but it's a DIRT rate after year 5.

This reminds me of current marketing brochures "Earn 12% over 5 years!", give us 10,000 and in 5 years we give you 11,200 less dirt. So after 5 years you give me 1,200? Hmmm....

The An Post thingy isn't bad, don't get me wrong, but I personally found the lack of flexibility and also that rates are going up I'm gonna get a better CAR off Northern.

Ah, now I get it, cheers!

MrP