Saving Childrens Allowance - Education Fund

sbob990

Hi everyone,

I have been putting away the childrens allowance since my children were born into separate AIB Online Regular saver accounts, which had an interest rate of 4% when my first was born. Its now a measly 0.10%.

I just checked my oldests account today and It has passed €10k with an interest allowed of €8.58 (€12.80-€4.22 DIRT)

Is there better returns available elsewhere?
I dont plan on touching this money until they are ready for college, or to help start a business etc. if they decide not to go the traditional route.

My oldest is 6 so I have so I have another 11 years before they finish secondary school.

Any advise appreciated. Thank you.

Yyhhuuu

sbob990 wrote: »

Hi everyone,

I have been putting away the childrens allowance since my children were born into separate AIB Online Regular saver accounts, which had an interest rate of 4% when my first was born. Its now a measly 0.10%.

I just checked my oldests account today and It has passed €10k with an interest allowed of €8.58 (€12.80-€4.22 DIRT)

Is there better returns available elsewhere?
I dont plan on touching this money until they are ready for college, or to help start a business etc. if they decide not to go the traditional route.

My oldest is 6 so I have so I have another 11 years before they finish secondary school.

Any advise appreciated. Thank you.

Well done! The best is ulster bank 'Home Saver' or ' Specual Interest' both regular saver gross at 0.85% at present.

sbob990

I thought I read somewhere that Ulster Bank are leaving Ireland?

deisedevil

sbob990 wrote: »

Hi everyone,

I have been putting away the childrens allowance since my children were born into separate AIB Online Regular saver accounts, which had an interest rate of 4% when my first was born. Its now a measly 0.10%.

I just checked my oldests account today and It has passed €10k with an interest allowed of €8.58 (€12.80-€4.22 DIRT)

Is there better returns available elsewhere?
I dont plan on touching this money until they are ready for college, or to help start a business etc. if they decide not to go the traditional route.

My oldest is 6 so I have so I have another 11 years before they finish secondary school.

Any advise appreciated. Thank you.

I was saving children's allowance for same purpose. Until I realized how little the interest was and how much interest I was paying on my mortgage. So now I'm using it to clear the mortgage much earlier, and save myself about 30k. Then I'll start saving for college. So if you have debts, maybe think about clearing those first before putting money into a savings account at low interest. Just another option to think about.

Cape Clear

I suggest having a word with a QFA regarding long term regular savings products. New Ireland offer such a policy as I'm sure do the other providers but you need to go through a broker I believe.

Buddy Bubs

All life and pensions companies have savings funds geared towards education. Recommended to invest for 5 years at a minimum. Different risk appetites catered for.
New Ireland
Royal London
Zurich
Irish life
Acorn life

Theres 5 sites to look at and you can get advice from brokers or the companies themselves.

Saudades

A 10 year National Solidarity Bond will give you 10% tax-free if you stay invested for the full 10 years.

Yyhhuuu

Buddy Bubs wrote: »

All life and pensions companies have savings funds geared towards education. Recommended to invest for 5 years at a minimum. Different risk appetites catered for.
New Ireland
Royal London
Zurich
Irish life
Acorn life

Theres 5 sites to look at and you can get advice from brokers or the companies themselves.

The values of shares can rise and fall...

con747

Yyhhuuu wrote: »

The values of shares can rise and fall...

That is why there is a different risk rate for each one, lower risk = lower gain. Higher risk = higher gain and not all are share related.

Henry Ford III

Buddy Bubs wrote: »

All life and pensions companies have savings funds geared towards education. Recommended to invest for 5 years at a minimum. Different risk appetites catered for.
New Ireland
Royal London
Zurich
Irish life
Acorn life

Theres 5 sites to look at and you can get advice from brokers or the companies themselves.

Royal London don't market a savings plan here. Aviva and others do though.

It's madness to be putting long term money into deposits or similar imho - take inflation into account and the only guarantee is that you'll lose.

Hontou

Henry Ford III wrote: »

It's madness to be putting long term money into deposits or similar imho - take inflation into account and the only guarantee is that you'll lose.

deisedevil wrote: »

I was saving children's allowance for same purpose. Until I realized how little the interest was and how much interest I was paying on my mortgage. So now I'm using it to clear the mortgage much earlier, and save myself about 30k. Then I'll start saving for college. So if you have debts, maybe think about clearing those first before putting money into a savings account at low interest. Just another option to think about.

I agree with these two posts completely.

Pay as much of your mortgage off if you have one and get rid of other debts first.

OP, I was in your position 5 years ago and had €30000 saved in an EBS account for my kids college. I have 4 kids that were going to be crossing over each other in college and knew I would not be able to afford it. So I got out a small mortgage and along with the €30000 bought a cheap house to rent out with the plan to sell it a year before my first went to college. The tenants have notice a year but don't have to move out because of Covid. My eldest took a year out instead and now has decided to do an apprenticeship as we can't release the funds from the house to pay her accommodation and fees. Very frustrating that my planning to give them choices backfired. (My risk, my fault, I know).

If I could go back in time I would just have paid everything against my own mortgage to free up disposable income the years the kids are in college.

thunderdog

I put my kids children’s allowance each month into a mix of medium to low risk investments. Via bank of Ireland life. I’m only a year into it-approx 8% return on it so far but as another poster has mentioned, like all investments this can go up or down, but over 18 years, should be in a favourable position

As an aside, it’s linked to my boi 365 account, so I can see the total amount when i log into my account which is handy to keep an eye on

Cape Clear

Is it really the best practice to use spare cash to reduce the balance owed on your mortgage given it's probably the cheapest loan a person would have?

fits

Cape Clear wrote: »

Is it really the best practice to use spare cash to reduce the balance owed on your mortgage given it's probably the cheapest loan a person would have?

Yes it is. It’s risk free and quite a significant return especially if early in the mortgage term. Any thing that returns more has a risk attached.

Hontou

Cape Clear wrote: »

Is it really the best practice to use spare cash to reduce the balance owed on your mortgage given it's probably the cheapest loan a person would have?

There is also a psychological benefit to seeing your debt reduce. I remember being in negative equity from 2009 - 2013 after buying in 2007. Watching that debt reduce makes me so happy.:)

sbob990

Pay as much of your mortgage off if you have one and get rid of other debts first.

Thankfully I was in the fortunate/unfortunate position to be only coming out of college during the recession. So while jobs were basically non existant for my degree in construction, we managed to buy our house near the very bottom of the market, so no mortgage and thankfully zero debt.

I put my kids children’s allowance each month into a mix of medium to low risk investments. Via bank of Ireland life. I’m only a year into it-approx 8% return on it so far but as another poster has mentioned, like all investments this can go up or down, but over 18 years, should be in a favourable position

What are the fees on something like this if you don't mind me asking. And is there CGT tax when you withdraw or how expensive is this route.

I may contact AIB and see what the offer?
I don't mind leaving them, they used to do free banking if I maintained a balance of €2500 in my current account but they ended that back in November.

Would I be better off sticking it in the S&P 500 myself through degiro or similar and let it grow? I imagine the the banks take a nice chunk for themselves.

I have been reading online and in the UK an ISA is the obvious choice. Is there anything similar in Ireland?


I have zero investing knowledge, and don't know anyone who does, but I do know that leaving money sitting in a savings account is only going to cost me money in the long run, especially the way the ECB has been printing money the last 12 months.

Jim2007

sbob990 wrote: »

Would I be better off sticking it in the S&P 500 myself through degiro or similar and let it grow? I imagine the the banks take a nice chunk for themselves.

Everyone involved in the financial services industry is there to make as much profit as they can. Banks and brokers tend to be more up front about their fees, while discount brokers tend to more circumspect about it.

I have zero investing knowledge, and don't know anyone who does, but I do know that leaving money sitting in a savings account is only going to cost me money in the long run, especially the way the ECB has been printing money the last 12 months.

Well whatever else, you do need to understand the nature of financial risk... leaving your savings in a bank account is best considered to be the cheapest way of a minimizing financial risk. So the question becomes how much are you willing to loose in an attempt to achieve a better outcome? 10%, 20%, 30%.... more?

And equally important is do you have the mentality to carry it off, most people don’t. I’m am of the opinion that DIY investing is not for most people.

sbob990

sbob990 wrote: »

What are the fees on something like this if you don't mind me asking. And is there CGT tax when you withdraw or how expensive is this route.


I may contact AIB and see what the offer?


I have been reading online and in the UK an ISA is the obvious choice. Is there anything similar in Ireland? .

The fees are on BoI product are on this document. 1.5% - 1.85% AMC + Early exit charges. Life Assurance Exit Tax applies to these plans and that's currently 41%, on the gain. It's payable on each 8th anniversary of the plan or when there is a withdrawal/encashment. It's a Nrew Ireland product as BoI are tied to them.

Charges for the AIB (Irish Life) product are on page 22 of this

There's no ISA equivalent in RoI.

Gerard

AndrewJRenko

[Deleted User] wrote: »

The fees are on BoI product are on this document. 1.5% - 1.85% AMC + Early exit charges. Life Assurance Exit Tax applies to these plans and that's currently 41%, on the gain. It's payable on each 8th anniversary of the plan or when there is a withdrawal/encashment. It's a Nrew Ireland product as BoI are tied to them.

Charges for the AIB (Irish Life) product are on page 22 of this

There's no ISA equivalent in RoI.

Gerard

Is there any low/no charge investment fund options here, similar to what Quinn Life used to do, or what Labrokers do for pensions?

AndrewJRenko

AndrewJRenko wrote: »

Is there any low/no charge investment fund options here, similar to what Quinn Life used to do, or what Labrokers do for pensions?

Yes.

AndrewJRenko

[Deleted User] wrote: »

Yes.

Good to know that someone is offering this in the market