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Saving Child Benefits

  • 06-07-2017 10:57pm
    #1
    Registered Users Posts: 89 ✭✭ doniepony


    Hi all

    Hope I am in the correct thread.

    My wife and I had a baby 2 weeks ago and are thinking of saving/investing the child benefit money into some form of savings scheme over the foreseeable future to help pay for the expensive times ahead.

    I have done some research and the returns from banks seem low and it appears this will be the case long term. Is any bank or lender offering a decent rate at present that I may be missing?

    Also, I am looking for some advice or guidance on where a good place would be to invest the money over a long period (12 year+). I work in the public sector so so have dealt with cornmarket in the past- they spoke to me last year about investing this money as a better option to savings with low return.

    I would appreciate any advice/opinions on this matter..

    Thanks in Advance

    Donie


Comments

  • Registered Users Posts: 537 topper_harley2


    If its child benefit then you'd be looking at a regular saver account(as opposed to a lump sum). Various banks offer child savers. e.g. EBS offers https://www.ebs.ie/save-and-invest/childrens-savings-account. This is 2% interest. KBC offer a family saver as well. Check out https://www.askaboutmoney.com/threads/regular-savings-accounts.20747/

    TBH, there isnt much of a difference between all of them due to terrible rates for all. I recently opened the EBS one for nephew, just so the account was in their name.

    If you're looking to actually grow the money, then you'd need to look into funds, which means taking on risk of losing some money. If its just the raw child benefit, which Google tells me is E140 per month, then I wouldnt bother with funds, just keep it simple with the EBS account.


  • Closed Accounts Posts: 32,688 ✭✭✭✭ Bodie Ashy Minute


    We had our child benefit paid directly in to state savings. The result was a great windfall when we passed it to the kids when they got married.


  • Closed Accounts Posts: 2,007 ✭✭✭ bmwguy


    This is exactly what I do. 2 kids allowances of 140 euro each going into an investment fund managed by HSBC. Plan to leave it there for another 10+ years anyway and it will be for them in the future, education costs/house deposit or whatever. Doing very well averaging about 9% a year. Taxed on gains but sure if I will be paying tax it means I will have gained.


  • Registered Users Posts: 537 topper_harley2


    bmwguy wrote: »
    This is exactly what I do. 2 kids allowances of 140 euro each going into an investment fund managed by HSBC. Plan to leave it there for another 10+ years anyway and it will be for them in the future, education costs/house deposit or whatever. Doing very well averaging about 9% a year. Taxed on gains but sure if I will be paying tax it means I will have gained.
    Link? What are the annual charges?


  • Banned (with Prison Access) Posts: 3,246 ✭✭✭ judeboy101


    bmwguy wrote: »
    This is exactly what I do. 2 kids allowances of 140 euro each going into an investment fund managed by HSBC. Plan to leave it there for another 10+ years anyway and it will be for them in the future, education costs/house deposit or whatever. Doing very well averaging about 9% a year. Taxed on gains but sure if I will be paying tax it means I will have gained.

    I too would love to know what your fees are like?


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  • Posts: 17,733 ✭✭✭✭ [Deleted User]


    bmwguy wrote: »
    This is exactly what I do. 2 kids allowances of 140 euro each going into an investment fund managed by HSBC. Plan to leave it there for another 10+ years anyway and it will be for them in the future, education costs/house deposit or whatever. Doing very well averaging about 9% a year. Taxed on gains but sure if I will be paying tax it means I will have gained.

    Is this the one you repeatedly mention?
    You have your pension, own money and also the children's allowance in it?
    You're not a believer in diversification it seems :pac:


  • Registered Users Posts: 241 ✭✭ degzs


    Sorry to bring up an old thread

    Is the Ireland state savings childcare plus a good option?

    Is there any other options worth looking at?


  • Registered Users Posts: 6,818 ✭✭✭ Inspector Coptoor


    My young fella has just turned 1.

    I took all his CB for the first year and bought a 10 year government bond with a guaranteed return of 16%.

    Plan on doing that every year til he is 10 and then when they start maturing I’ll put it back in to a 5 year bond.

    Should make a big difference.


    €140 x 12 x 18 = €30240 is how much you get for 18 years and just put it on deposit at 0.01% - the return would be €302.40 or thereabouts.

    My way should see the figure go up over €35,000 for a return of around €4800

    A 16 fold return on leaving just leaving it on deposit.

    My maths on this may be off a bit hit I’m tired so meh

    This way is better than just putting it under the mattress anyway


  • Registered Users Posts: 936 ✭✭✭ chases0102


    Is it a daft/irresponsible decision to put the CB into a Zurich managed, Prisma 4 fund?

    Child is 3, have been using Post Office until now, but just noticed the miserly returns.

    So essentially a 14/15 year investment. Just wondering if anyone else has done something similar, or am I playing a dodgy game with my son's education fund?


  • Registered Users Posts: 936 ✭✭✭ chases0102


    chases0102 wrote: »
    Is it a daft/irresponsible decision to put the CB into a Zurich managed, Prisma 4 fund?

    Child is 3, have been using Post Office until now, but just noticed the miserly returns.

    So essentially a 14/15 year investment. Just wondering if anyone else has done something similar, or am I playing a dodgy game with my son's education fund?

    Would anyone have any insight into this?


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  • Registered Users Posts: 3,031 ✭✭✭ Browney7


    chases0102 wrote: »
    Would anyone have any insight into this?

    My 2 cents is that you need to look at any investment in terms of your overall financial position. So if you've short term debt, it's foolish to be paying interest whilst saving on the other side. Assuming this not an issue for you, you move onto what other options are available to you like paying down the mortgage etc. Clearly you can't liquidate a portion of the house when the time comes so it's prudent to have liquid capital at hand to pay for education. But what are your career prospects - are you on a good salary progression so having cash at hand in ten years won't be a huge issue? Are you maxing out pension contributions and getting tax relief and tax free growth instead of investing after tax income and paying tax on gains?

    The fund itself is presumably fine - a one size fits all fund for people who want to get a modest return ahead of inflation but without huge volatility. Is it worth paying the 1% fee per annum to the manger to manage passive equity, which presumably is between a minimum and maximum range depending on the manager's view of the risk inherent in the market? They'll also hold a portion of the money invested in low yielding bonds and cash - could you do this yourself via saving certs etc as you are currently doing?


  • Registered Users Posts: 7,399 ✭✭✭ Nonoperational


    chases0102 wrote: »
    Is it a daft/irresponsible decision to put the CB into a Zurich managed, Prisma 4 fund?

    Child is 3, have been using Post Office until now, but just noticed the miserly returns.

    So essentially a 14/15 year investment. Just wondering if anyone else has done something similar, or am I playing a dodgy game with my son's education fund?

    Ultimately nobody knows what the markets will do. In my opinion it is very unlikely with a 15 year horizon you will come out worse off if you invest in a market tracking multi asset fund. But if you absolutely need the money it may not be sensible. If you can survive without it you may make a hell of a lot more than on deposit.

    You need to be ware of the forced 8 year disposal tax though.


  • Registered Users Posts: 75 ✭✭ Rossie11


    chases0102 wrote: »
    Is it a daft/irresponsible decision to put the CB into a Zurich managed, Prisma 4 fund?

    Child is 3, have been using Post Office until now, but just noticed the miserly returns.

    So essentially a 14/15 year investment. Just wondering if anyone else has done something similar, or am I playing a dodgy game with my son's education fund?

    I am in the exact same one with Zurich. Took it out in aug 2015 and its up 10% approx.
    Happy with that.


  • Registered Users Posts: 936 ✭✭✭ chases0102


    Browney7 wrote: »
    My 2 cents is that you need to look at any investment in terms of your overall financial position. So if you've short term debt, it's foolish to be paying interest whilst saving on the other side. Assuming this not an issue for you, you move onto what other options are available to you like paying down the mortgage etc. Clearly you can't liquidate a portion of the house when the time comes so it's prudent to have liquid capital at hand to pay for education. But what are your career prospects - are you on a good salary progression so having cash at hand in ten years won't be a huge issue? Are you maxing out pension contributions and getting tax relief and tax free growth instead of investing after tax income and paying tax on gains?

    The fund itself is presumably fine - a one size fits all fund for people who want to get a modest return ahead of inflation but without huge volatility. Is it worth paying the 1% fee per annum to the manger to manage passive equity, which presumably is between a minimum and maximum range depending on the manager's view of the risk inherent in the market? They'll also hold a portion of the money invested in low yielding bonds and cash - could you do this yourself via saving certs etc as you are currently doing?

    Thanks a million for that response, very helpful

    We don't have any debt other than our mortgage, which we only took out two years ago. Wife and I are lucky to have relatively secure jobs, for me cash in hand in ten years won't be an issue.

    I am not, however, maxing out my pension contributions - I am a pre-2011 public sector worker, but have not taken out any AVCs etc.

    As regards paying the 1.25% fee, I wouldn't know where to start to try and do something myself, so am happy enough to pay this as long as it doesn't significantly eat into profits.

    I am reassured having read the last few posts that it is *probably* a safe thing to do, if I wanted the money to beat inflation - the only alternative I thought of was the State Savings 10 year savings, which is 16% return, tax free?


  • Registered Users Posts: 936 ✭✭✭ chases0102


    Rossie11 wrote: »
    I am in the exact same one with Zurich. Took it out in aug 2015 and its up 10% approx.
    Happy with that.

    That sounds great Rossie, thanks for that.

    Does that include the management fee, and is the 10% after tax?


  • Registered Users Posts: 936 ✭✭✭ chases0102


    Ultimately nobody knows what the markets will do. In my opinion it is very unlikely with a 15 year horizon you will come out worse off if you invest in a market tracking multi asset fund. But if you absolutely need the money it may not be sensible. If you can survive without it you may make a hell of a lot more than on deposit.

    You need to be ware of the forced 8 year disposal tax though.

    My OH and I worked out the figures, and we reckon we can survive without it - so we felt we may as well try and use it as efficiently as possible. We are not especially wealthy, middle income earners, but education will hopefully be important for our kids in the future, and we want to be as prepared as possible.


  • Registered Users Posts: 1,194 ✭✭✭ bungaro79


    I've been looking at investing a lump sum of 10k into something like the Zurich Prisma fund but I've been reading up on ETFs and Index funds and am wondering if this is the way to go now??


  • Registered Users Posts: 1,323 ✭✭✭ FastFullBack


    bungaro79 wrote: »
    I've been looking at investing a lump sum of 10k into something like the Zurich Prisma fund but I've been reading up on ETFs and Index funds and am wondering if this is the way to go now??

    I've been thinking the exact same. For my 1st kid I started a fund through Irish Life; Prisma 5. €100 a month and various lump sums are added.

    For my 2nd kid I'm now considering doing it more manually using a DeGiro A/C and a vanguard global ETF. Obviously fees are a lot smaller, but paying tax will be manually and painful due to the 8 year deemed disposable rule.

    Other than the awkward tax setup is there anything else I should be considering?
    In terms of risk I'm happy putting this money in stocks given it will be an 18 year+ investment.


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