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Investing For Child’s College Fund

  • 15-02-2021 12:02pm
    #1
    Registered Users Posts: 3 Looseygoosey1


    Hi

    Recently had a baby and thoughts have turned to putting her childrens allowance plus another few quid a month away for her college fund.

    My pension is with irishlife so I asked the advisor about it and she is pushing a clear regular invest account.

    However I’m not that knowledgeable about alternative ways to invest that might be better options regarding fees etc.

    Can anyone suggest a better way invest than going through one of the big companies investment savings accounts?

    Thanks in advance


Comments

  • Banned (with Prison Access) Posts: 542 ✭✭✭ Bill Ponderosa


    Might be much better off either maximising your pension contributions or focus in getting the mortgage paid off earlier.


  • Registered Users Posts: 3 Looseygoosey1


    Might be much better off either maximising your pension contributions or focus in getting the mortgage paid off earlier.

    I’m a director of a ltd company so company is paying the pension.
    The mortgage is at 2.35% rate. I thought of that as well but I thought with the rate being what it is that I could get a better return doing something else


  • Registered Users Posts: 8,755 ✭✭✭ Shedite27


    Hi,

    The biggest think financially to consider here is how you can get the money into your childs name. You can give your child €330k over a lifetime tax free, plus €3k per year, so if you can make the "college fund" fit within their €3k per year, it'll save you if you end up leaving them a house or something.

    A years worth of child allowance is €1650 so over 18 years at 6% growth that could be a €60k gift tax free.

    I haven't been able to find a brokerage in Ireland that will put it in my childs name, which led me back to Aviva. They have a regular saver that allowed me to do it. I have to pay a 1% government levy and some management fees, but the big tax saving in the end makes it worth it


  • Registered Users Posts: 1,490 ✭✭✭ thomasm


    Shedite27 wrote: »
    Hi,

    I haven't been able to find a brokerage in Ireland that will put it in my childs name, which led me back to Aviva. They have a regular saver that allowed me to do it. I have to pay a 1% government levy and some management fees, but the big tax saving in the end makes it worth it


    Zurich have one that is set up under assignment to the child. The funds move into child's name straight away and there is a record of it. Its all done on one application form.


  • Registered Users Posts: 8,755 ✭✭✭ Shedite27


    thomasm wrote: »
    Zurich have one that is set up under assignment to the child. The funds move into child's name straight away and there is a record of it. Its all done on one application form.

    Yeah sorry, when I said "Aviva", I meant any of those companies, Irish Life, Zurich etc.

    Ideally there'd be a broker that would let you setup a share account for your kids, haven't been able to find a Degiro, Interactive Brokers etc that will allow this.

    They have these in the states but nothing that I can find here
    https://www.loved.com/


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  • Registered Users Posts: 198 ✭✭ Bez Bing


    Shedite27 wrote: »
    Hi,

    The biggest think financially to consider here is how you can get the money into your childs name. You can give your child €330k over a lifetime tax free, plus €3k per year, so if you can make the "college fund" fit within their €3k per year, it'll save you if you end up leaving them a house or something.

    A years worth of child allowance is €1650 so over 18 years at 6% growth that could be a €60k gift tax free.

    I haven't been able to find a brokerage in Ireland that will put it in my childs name, which led me back to Aviva. They have a regular saver that allowed me to do it. I have to pay a 1% government levy and some management fees, but the big tax saving in the end makes it worth it
    Why wouldn’t you just save/invest the money yourself and then use it to pay for their college expenses I.e rent, fees, books, living expenses etc? Wouldn’t that be easier than putting the fund into their name? It would also give you more control over how you give it them.


  • Banned (with Prison Access) Posts: 353 ✭✭ discodiva92


    You have 18 years to save?You will need money to raise the kid too


  • Registered Users Posts: 1,678 ✭✭✭ MAJJ


    Shedite27 wrote: »
    Hi,

    The biggest think financially to consider here is how you can get the money into your childs name. You can give your child €330k over a lifetime tax free, plus €3k per year, so if you can make the "college fund" fit within their €3k per year, it'll save you if you end up leaving them a house or something.

    A years worth of child allowance is €1650 so over 18 years at 6% growth that could be a €60k gift tax free.

    I haven't been able to find a brokerage in Ireland that will put it in my childs name, which led me back to Aviva. They have a regular saver that allowed me to do it. I have to pay a 1% government levy and some management fees, but the big tax saving in the end makes it worth it

    Hi Shedite27 - would appreciate if can share the product, thanks


  • Registered Users Posts: 17,086 ✭✭✭✭ kippy


    Shedite27 wrote: »
    Hi,

    The biggest think financially to consider here is how you can get the money into your childs name. You can give your child €330k over a lifetime tax free, plus €3k per year, so if you can make the "college fund" fit within their €3k per year, it'll save you if you end up leaving them a house or something.

    A years worth of child allowance is €1650 so over 18 years at 6% growth that could be a €60k gift tax free.

    I haven't been able to find a brokerage in Ireland that will put it in my childs name, which led me back to Aviva. They have a regular saver that allowed me to do it. I have to pay a 1% government levy and some management fees, but the big tax saving in the end makes it worth it
    I don't think it's really worth that much effort to be frank about it unless you are talking about a significant sum......
    You'd nearly want to have some control over it anyway surely?

    Currently putting the CA into the foursight savings fund with Irish life - the type of investments can be amended as the years go on. Obviously fees and associated taxes also involved.
    Just hoping it's not "less value" than we put in at the end of it.
    Will be used to pay for the kids not insignificant (at that stage) college expenses most likely.


  • Registered Users Posts: 43,747 ✭✭✭✭ 6


    Pay off debt asap. Eg Mortgage. Also then max pension and take advantage of big tax break.

    Then concentrate on saving post tax cash.

    Most people with kids pay/have paid high creche fees without a nest egg.


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  • Registered Users Posts: 8,755 ✭✭✭ Shedite27


    Bez Bing wrote: »
    Why wouldn’t you just save/invest the money yourself and then use it to pay for their college expenses I.e rent, fees, books, living expenses etc? Wouldn’t that be easier than putting the fund into their name? It would also give you more control over how you give it them.
    kippy wrote: »
    I don't think it's really worth that much effort to be frank about it unless you are talking about a significant sum......
    You'd nearly want to have some control over it anyway surely?

    When we say "college fund" I'm really probably talking more about a deposit for a house. Anyone buying a house in Ireland can see how hard it is without help from the parents. Saving the children's allowance for those that can afford it means you can gift that to your child tax free.

    It's €330k over a lifetime, saving the €60k now will reduce from the tax bill for your child when you die if you're passing a house to them.
    kippy wrote: »
    Currently putting the CA into the foursight savings fund with Irish life - the type of investments can be amended as the years go on. Obviously fees and associated taxes also involved.
    Just hoping it's not "less value" than we put in at the end of it.
    Will be used to pay for the kids not insignificant (at that stage) college expenses most likely.
    You've 99% chance of profit in a S&P fund over 15 years.
    6 wrote: »
    Pay off debt asap. Eg Mortgage. Also then max pension and take advantage of big tax break.

    Then concentrate on saving post tax cash.

    Most people with kids pay/have paid high creche fees without a nest egg.
    Absolutely, take care of today first, I appreciate this idea is for people who are lucky enough to be able to save


  • Registered Users Posts: 8,755 ✭✭✭ Shedite27


    MAJJ wrote: »
    Hi Shedite27 - would appreciate if can share the product, thanks

    It's the regular saver product with Aviva that I got through my broker
    https://www.aviva.ie/investments/savings-investments/saving-for-education/


  • Registered Users Posts: 1,788 ✭✭✭ Cute Hoor


    What Shedite27 has posted about giving the €3k per year to your kids (however you do it) makes total and absolute sense, and I would suggest the sooner one starts doing it the better, you are building a nice tax free nest egg for them now, rather than waiting until you kick the bucket, and they then having to pay tax on it, always assuming that you're wealth hasn't been decimated by fair deal in your fading years. An absolute no brainer imo. Of course it's not actually €3k pa, it's actually €6k assuming both parents are alive. If you are a 30 year old when you (and your partner) start doing this you could have given €360k tax free to your child by the time you are 90.

    Always assumes of course that you can afford it, and that you will be planning on leaving your estate to your kid anyway.


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