Children’s savings account

Sarah1916 · 30-08-2019 9:20pm #1

We would like to set up a savings account for our newborn baby. We would both like to be able to set up monthly direct debits into this account (separately we plan to use the an post scheme to save the children’s allowance). Looking a bonkers.ie the permanent TSB online regular savings looks like the best option for us interest rate wise. The Kbc regular savings has too high of a monthly minimum for us. The question I have is if we use one of the banks regular savings accounts is it possible to have it in a joint name of us and the baby? We want this to be a long term savings account where we can give the money eventually in bits and pieces to our baby when they are getting their first car/getting married/buying house etc. I don’t want this to eat into their tax free threshold from us as parents, is this avoidable if the account is in their name as well? I don’t want it to be fully in their name as we would like to control the account. I don’t want them to be able to have full access to the whole amount at the age of 18. Any advise would be appreciated, thanks.

FastFullBack · 30-08-2019 9:37pm

Sarah1916 wrote: »

We would like to set up a savings account for our newborn baby. We would both like to be able to set up monthly direct debits into this account (separately we plan to use the an post scheme to save the children’s allowance). Looking a bonkers.ie the permanent TSB online regular savings looks like the best option for us interest rate wise. The Kbc regular savings has too high of a monthly minimum for us. The question I have is if we use one of the banks regular savings accounts is it possible to have it in a joint name of us and the baby? We want this to be a long term savings account where we can give the money eventually in bits and pieces to our baby when they are getting their first car/getting married/buying house etc. I don’t want this to eat into their tax free threshold from us as parents, is this avoidable if the account is in their name as well? I don’t want it to be fully in their name as we would like to control the account. I don’t want them to be able to have full access to the whole amount at the age of 18. Any advise would be appreciated, thanks.

If your planning on not touching it for 18+ years you should put it into an investment fund. We're doing this for our baby. I'll find the name of our fund

Wheety · 30-08-2019 9:41pm

It has to be fully in the baby's name and less than €3k per annum from each person depositing to the account to not eat into the lifetime gift allowance.

As mentioned above an investment account in trust for the baby would be the best option.

I think when they're 18, they technically can take control but not sure if you can get away without telling them until they're older.

We're going to do this and would like to wait until around 25 before revealing it. I have to do some proper research soon. Baby arriving in December.

Static M.e. · 03-09-2019 8:07am

FastFullBack wrote: »

If your planning on not touching it for 18+ years you should put it into an investment fund. We're doing this for our baby. I'll find the name of our fund

Also interested in hearing the name of the fund and how I can do the same.

Thank you

FastFullBack · 03-09-2019 8:32am

Static M.e. wrote: »

Also interested in hearing the name of the fund and how I can do the same.

Thank you

This is the fund I have invested in:
https://www.zurich.ie/funds/fund-products/multi-assets/prisma-funds/prisma-5/

I'm lucky my sister works as a financial advisor so this was one of the recommended options and I also get a discount on fees etc which will help.

Static M.e. · 04-09-2019 8:52am

Thank you, appreciate it

04-09-2019 9:18am

FastFullBack wrote: »

This is the fund I have invested in:
https://www.zurich.ie/funds/fund-products/multi-assets/prisma-funds/prisma-5/

I'm lucky my sister works as a financial advisor so this was one of the recommended options and I also get a discount on fees etc which will help.

Is that a lump sum investment or can you add to it on a regular basis?

FastFullBack · 04-09-2019 12:08pm

Malaya Gorgeous Sandal wrote: »

Is that a lump sum investment or can you add to it on a regular basis?

I add on a monthly basis and can also do one-off lump sum's as well.

antix80 · 04-09-2019 1:54pm

Sarah1916 wrote: »

The Kbc regular savings has too high of a monthly minimum for us. The question I have is if we use one of the banks regular savings accounts is it possible to have it in a joint name of us and the baby? We want this to be a long term savings account where we can give the money eventually in bits and pieces to our baby when they are getting their first car/getting married/buying house etc. I don’t want this to eat into their tax free threshold from us as parents, is this avoidable if the account is in their name as well? I don’t want it to be fully in their name as we would like to control the account. I don’t want them to be able to have full access to the whole amount at the age of 18. Any advise would be appreciated, thanks.

Well my advice..

Don't save long-term in cash. Inflation will eat away at it. I'd like to be able to recommend a Life Assurance savings plan but those type of savings policies have fairly high fees and the government made them a lot less attractive in recent years in terms of tax treatment and levies. But definitely, some exposure to the stock market is the way to go.

Second.. you really have your child's interests at heart and you're right to consider tax implications. Maybe there's a some form of trust set-up that would restrict access until your child is 21 say.

Another viewpoint.. What if your child doesn't get married, and decides not to buy a house, and you decide that the expensive course they want to do in a private college is a waste of money.. on their 40th birthday do you just say "well, sorry things didn't work out, here's your baby money"?

I think the best way you can help your child in the future is to raise them to be responsible and to value money -and that includes them saving regularly in an account solely in their own name - if they blow it aged 18, well at least they enjoyed the party.

Sorry for going off on one.. but I guess I'd summarise it as follows.

Give them their own money to save in their own name, and teach them to value money but not idolise it
Don't worry if they blow it when they're 18 on an ill-advised gap year. It's their money
Help them pay for their college if you wish
Have a trust/fund built up that you can gift them when they show they're responsible (when they hold a job for a year even if you think it's dead-end, or when they finish college, or maybe while they're in college) OR when they're independent. Whichever comes first. Hopefully they'll be pursing some dream at this stage. It can give them a sense of freedom to be able to move to another city without worrying about rent prices or scrimping and saving. Remember that their own earning potential is millions of euros over their lifetime. When you give a gift, the fewer strings the better.
Anything after that.. give it as a gift.. car, wedding, whatever. Let them sort out their own tax. I seriously doubt revenue commissioners ever chased a girl because her dad paid for the reception.
Inheritance planning is a separate issue. You can take out a life assurance policy that can cover inheritance tax if that's an issue.

Henry Ford III · 05-09-2019 9:38am

FastFullBack wrote: »

This is the fund I have invested in:
https://www.zurich.ie/funds/fund-products/multi-assets/prisma-funds/prisma-5/

I'm lucky my sister works as a financial advisor so this was one of the recommended options and I also get a discount on fees etc which will help.

Sounds decent, but Prisma 5 is a relatively high risk fund and won't be suitable for everyone.

As always get a proper review done OP and get a risk/reward assessment done also.

Henry Ford III · 05-09-2019 9:39am

antix80 wrote: »

Well my advice..

Don't save long-term in cash. Inflation will eat away at it. I'd like to be able to recommend a Life Assurance savings plan but those type of savings policies have fairly high fees and the government made them a lot less attractive in recent years in terms of tax treatment and levies. But definitely, some exposure to the stock market is the way to go.

Second.. you really have your child's interests at heart and you're right to consider tax implications. Maybe there's a some form of trust set-up that would restrict access until your child is 21 say.

Another viewpoint.. What if your child doesn't get married, and decides not to buy a house, and you decide that the expensive course they want to do in a private college is a waste of money.. on their 40th birthday do you just say "well, sorry things didn't work out, here's your baby money"?

I think the best way you can help your child in the future is to raise them to be responsible and to value money -and that includes them saving regularly in an account solely in their own name - if they blow it aged 18, well at least they enjoyed the party.

Sorry for going off on one.. but I guess I'd summarise it as follows.
Give them their own money to save in their own name, and teach them to value money but not idolise it

Don't worry if they blow it when they're 18 on an ill-advised gap year. It's their money

Help them pay for their college if you wish

Have a trust/fund built up that you can gift them when they show they're responsible (when they hold a job for a year even if you think it's dead-end, or when they finish college, or maybe while they're in college) OR when they're independent. Whichever comes first. Hopefully they'll be pursing some dream at this stage. It can give them a sense of freedom to be able to move to another city without worrying about rent prices or scrimping and saving. Remember that their own earning potential is millions of euros over their lifetime. When you give a gift, the fewer strings the better.

Anything after that.. give it as a gift.. car, wedding, whatever. Let them sort out their own tax. I seriously doubt revenue commissioners ever chased a girl because her dad paid for the reception.

Inheritance planning is a separate issue. You can take out a life assurance policy that can cover inheritance tax if that's an issue.

Some policies are good value, and others aren't. Ask an expert for advice.

p.s. Tax is a pain but the taxation of life assurance funds is comparable to D.I.R.T. so that's not a big deal.

lau1247 · 07-09-2019 9:51am

I'm interested in this too for my son but there doesn't seem to be any good option out there.

Saving in bank will give very low interest but invest in equity will give good returns with the right market condition. As it is currently trade wars and brexit, nothing seems like a decent option. This is evident also from the Zurich plan factsheet mentioned above where they make a loss in 2018.

Curious what do the more investment savy people do?

antix80 · 07-09-2019 10:31am

lau1247 wrote: »

As it is currently trade wars and brexit, nothing seems like a decent option. This is evident also from the Zurich plan factsheet mentioned above where they make a loss in 2018.

Investing a lump sum is risky.. A crash could wipe out 70% of your investment and it may never fully recover. Saving child benefit every month for 18 years is a different story as you might only have €1000 if the crash happens, but then you're still investing money (buying low) so you'll benefit from the recovery.

Factsheets are bull****. Unprofitable funds are quietly discontinued and ommitted. It's a marketing gimmick.

Consider this example.
Fund A. Low risk. Return 1%
Fund C. Med risk. Return 5%
Fund E. High risk. Return 15%.

Warning. Past performance doesnt guarantee future returns.

Sounds good, right? It would just be unlucky to make a loss? They'll even show returns over 12mths, 3yrs, 5yrs.. So you can invent a narrative without really having a clue of what's going on.

How about the funds they discontinued.
Fund B. Med risk. - 10%
Fund D. Med-high. - 30%

I think this goes on anyway!

Wheety · 09-09-2019 9:45am

Another option is just to overpay your mortgage and get it paid off as soon as possible. Then you can start putting money away and hopefully inflation won't be as big of a problem then as you can save more but over a shorter period.

Henry Ford III · 09-09-2019 2:23pm

lau1247 wrote: »

I'm interested in this too for my son but there doesn't seem to be any good option out there.

Saving in bank will give very low interest but invest in equity will give good returns with the right market condition. As it is currently trade wars and brexit, nothing seems like a decent option. This is evident also from the Zurich plan factsheet mentioned above where they make a loss in 2018.

Curious what do the more investment savy people do?

If you invest for long enough it's always good. Go over 10 years and you'll win.

Trade wars and Brexit will be a distant memory.....

09-09-2019 10:02pm

Wheety wrote: »

Another option is just to overpay your mortgage and get it paid off as soon as possible. Then you can start putting money away and hopefully inflation won't be as big of a problem then as you can save more but over a shorter period.

While overpaying a mortgage to an extent is a good idea it’s not the best idea to tie up all your money in it as you can’t access it when you might need a lump some for college etc.

I think saving or better again investing child benefit is the best option to enable you to be comfortable come more expensive times like when your child starts college.

EGavigan · 11-09-2019 11:30am

There is so much wrong with most of the comments in this thread but I'll start here;

Henry Ford III wrote: »

If you invest for long enough it's always good. Go over 10 years and you'll win.

Trade wars and Brexit will be a distant memory.....

I don't understand your following comment then;

Henry Ford III wrote: »

Sounds decent, but Prisma 5 is a relatively high risk fund and won't be suitable for everyone.

They are setting up an account for a newborn baby i.e. it is likely that this is a very long term investment perhaps 17 years. Are you recommending that they put it a low risk, say ESMA 3 fund (which will make very little return) so that the baby sleeps well at night and doesn't sit up worrying about market volatility?

antix80 · 11-09-2019 11:41am

EGavigan wrote: »

They are setting up an account for a newborn baby i.e. it is likely that this is a very long term investment perhaps 17 years. Are you recommending that they put it a low risk, say ESMA 3 fund (which will make very little return) so that the baby sleeps well at night and doesn't sit up worrying about market volatility?

My mate was setting up his pension at work and they gave him a form to fill out. At the time, he was about 33. He put it in the lowest risk fund(!) I told him he was making a huge mistake. Hopefully he took that on board.

Henry Ford III's comment isn't wrong. That fund won't suit everyone and in this climate I'd be particularly worried about investing a lumpsum (not that I have that burden!)
But as far as something that's meant to be informative to the op.. it's either an irrelevant comment or just poor advice.

Children’s savings account

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