Savings for the kids - best option?

NIMAN

I was planning to kick off the year by starting a savings scheme for my 2 infants. I was looking about putting away maybe €200 or so each month.

I noticed there was a State Savings account called Childcare Plus, and one for payment of child benefit which may have suited me, but from what I can gather of this 6yr plan, money is only paid into it for the 1st 12 months then that amount sits there for 5 more years.

This is not want I want, as I plan to put away this amount for a long as I possibly can, so what would be the best option for a plan of maybe 6 - 10 years or so?

homer911

NIMAN wrote: »

I was planning to kick off the year by starting a savings scheme for my 2 infants. I was looking about putting away maybe €200 or so each month.

I noticed there was a State Savings account called Childcare Plus, and one for payment of child benefit which may have suited me, but from what I can gather of this 6yr plan, money is only paid into it for the 1st 12 months then that amount sits there for 5 more years.

This is not want I want, as I plan to put away this amount for a long as I possibly can, so what would be the best option for a plan of maybe 6 - 10 years or so?

Savings Bonds or Certificates

statesavings.ie

NIMAN

But they are lump sum savings products are they not?

homer911

NIMAN wrote: »

But they are lump sum savings products are they not?

Kind of...

Subject to the overall min and max values, there is nothing to stop you making repeat purchases however - it just gets a bit cumbersome with all the form filling. They do however let you cross reference previous purchases so you dont need to resubmit your AML documentation each time.

If purchasing, you can do this in the Post Office, but the process at the counter is very slow and they often insist on the documentation even when its not required. Best to send any application straight to the GPO - they have a freepost address

Actually, just looked up the ChildCare Plus

http://www.statesavings.ie/products/Pages/ChildcarePlus.aspx

It looks to be a subset of the 6 year instalment savings (http://www.statesavings.ie/products/Pages/InstalmentSavings.aspx)

ChildCare Plus looks like a 12-month renewable product, which can be renewed at the end of 12 months, but it looks like its limited to the value of the child's Child Benefit, even though the limit is 12k per annum - its a bit confusing!

The advantage of ChildCare Plus over the 6 year instalment savings is the lodgements are made automatically from the Child Benefit Payment. Its not clear how the lodgements are made under 6 year instalment savings, but at least there is more flexibility on the amount being saved

NIMAN

Initially I thought ChildCare Plus was the ideal product but this line in the literature

12 month saving cycle which is left on deposit for a further 5 years

makes it sound like they only take 1yrs worth of money from you and then keep it. Why do this if it means you have to continually set up a new one every 12 months?

There is surely room in the market for a product that will take the CA off you and put it away indefinitely.

homer911

NIMAN wrote: »

Initially I thought ChildCare Plus was the ideal product but this line in the literature

12 month saving cycle which is left on deposit for a further 5 years

makes it sound like they only take 1yrs worth of money from you and then keep it. Why do this if it means you have to continually set up a new one every 12 months?

There is surely room in the market for a product that will take the CA off you and put it away indefinitely.

I think they are under some pressure from the banks not to be direct competitors due to the DIRT difference. NTMA recently reduced the rates on offer to appease the banks, but providing an automated regular deposit, DIRT free account would be very attractive to a lot of people and put the banks source of deposits under threat

Some of the banks are still doing regular savings accounts, but these are not directly linked to Child Benefit. All banks will be happy to take money off you on a regular basis, but its usually by standing order, with no specific benefits to the consumer regarding interest, just ease of use. They are still subject to DIRT.

The State Savings Scheme is also based on an accelerating deposit rate over the six years, so early encashment will yield a very poor return

Browney7

If you are happy to take a bit of risk you could set up a savings policy with one of the life companies and invest the money in equity funds perhaps. Charges can be high on some products but its another option for you

NIMAN

Browney7 wrote: »

If you are happy to take a bit of risk you could set up a savings policy with one of the life companies and invest the money in equity funds perhaps. Charges can be high on some products but its another option for you

Could you provide a link or two to some of those products?

Browney7

NIMAN wrote: »

Could you provide a link or two to some of those products?

Youd have to buy the product through a financial adviser. A fee based advisor may be better as they would probably set up the contract on a reduced/nil commission basis giving you better value in the long term. The Irish life, new Ireland and Zurich websites should have information on their products and funds available. Rabo direct also have a platform to invest regularly in numerous different funds. Some of the posters on this forum advocate buying ETFs through online brokers also but I wouldnt be familiar with this approach. There is a very real possibility you could lose money if investing in the markets but also potential to achieve growth in excess of deposit rates. Youd have a state guarantee with the post office but there has been and will continue to be a lot of downward pressure on deposit rates. Im posting off a phone so dont really have the facility for providing links im afraid