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Investing Children's Allowance in S&P500 - Mod warning post #21

  • 31-01-2024 11:34am
    Registered Users Posts: 104 ✭✭

    We're lucky enough not to need to rely on the childrens allowance payment we receive for our 1 child for day to day expenses.

    I am considering setting up a DeGiro account in one of our names and investing the monthly payment in an S&P500 ETF.

    The kid is 3 so it would be a long term investment. Just wondering does anyone do similar or have any strong reason not to do it.


    Post edited by Nody on



  • Moderators, Category Moderators, Arts Moderators, Business & Finance Moderators, Entertainment Moderators, Society & Culture Moderators Posts: 18,281 CMod ✭✭✭✭Nody

    Do something similar; the only alternative I'd bring up would be to consider a global fund instead (it would still be heavily tipped towards US, most are around 70% USA shares) but provide a broader base. Nothing wrong with an S&P500 either only an alternative for a broader base in general to diversify further.

  • Registered Users Posts: 104 ✭✭Quiet Achiever

    That's a really good point and something that i consider with my own investments , but i get greedy when i see s&p returns and justify it by saying "if the US goes down, then we're all likely screwed anyway".

    But maybe i should be slightly more conservative for my little guys money.

  • Registered Users Posts: 753 ✭✭✭badboyblast

    Could I ask you where would you stand with then transferring this to your child at any stage?

    Would it contribute towards their lifetime inheritance threshold as it was in your name and just say it was sizeable enough say at 18 years of age, would it be liable for any other tax?

  • Registered Users Posts: 5,758 ✭✭✭masterboy123

    I use Trading 212 and Revolut. But can't find S&P500 stock there.

    Could you guide its trading name pls?

  • Registered Users Posts: 4,096 ✭✭✭The Ayatolla

    For S&P500 on T212, I use the Vanguard (VUAG).

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  • Registered Users Posts: 2,963 ✭✭✭downtheroad

    If you pay for a child's education or their wedding it isn't a taxable event. If you just give them the contents of the fund, and it was in your name then that's coming off their lifetime inheritance.

    If you can open the fund in their name and lob in €3,000 a year (€6,000 for 2 parents) then it won't come from the lifetime inheritance or gift threshold.

    S&P 500 is subject to deemed disposal after 8 years I'm pretty certain, which will create an exit tax of 41% on any gains as things currently stand.

  • Registered Users Posts: 1,247 ✭✭✭Schorpio

    We're thinking of doing the same, and we spoke with a financial advisor about it.

    Basically, if the account is in the parent(s) name, then the usual gifting tax rules apply. There's a yearly exemption, and a lifetime exemption. The fund could also be used for other tax-exempt things, such as funding college, funding a wedding etc.

    You can set up an investment account in your child's name, but you lose most of the control of the account after it has been set up, i.e. what you can go with the account is limited. There would be fewer tax complications though, were you to decide to hand the lump sum over to your child at some stage down the line.

    To be clear, I'm not a financial advisor - just repeating advice I was given.

  • Registered Users Posts: 5,758 ✭✭✭masterboy123

  • Registered Users Posts: 4,096 ✭✭✭The Ayatolla

    Yep. You can buy partial shares in Trading 212. There are other pies too very similar to S&P500. Worth a Youtube around or a bit of research if you're interested in long-term investment.

    Personally speaking, investment in Ireland is a disaster. There are no benefits like the UK (Junior ISA) or USA (Roth IRA etc) have where there are very favourable tax benefits of long-term investing.

    In Ireland it's all geared towards pension contributions and AVC's and even then depending on situation, you're taxed on your pension upon retirement most of the time.

    As of now, I use the Children's Allowance to make payments off my mortgage capital, especially with rising interest rates expected when my current fixed rate term is up for renewal in 18 months time. I guess the idea there is I'm saving on interest payments in the long term and the earlier it's paid off, the more money in the pocket I'll have when kids are in their teens. 🤷‍♂️

  • Registered Users Posts: 490 ✭✭beeker1

    This is the reason why children's allowance should be means tested ! They're are working families who just about cover their bills every month and probably feel guilty about not been able to give their children those little extras , nevermind a stock investment funded by those same families taxes for the next 15 years , I'm sure you pay a lot of tax too but S&P investments were the last thing Noel Browne or whoever brought the allowance envisaged !

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  • Registered Users Posts: 4,096 ✭✭✭The Ayatolla

    Those working families (if paying high taxes, implies high income) should probably invest some of their time into prudent financial planning.

  • Registered Users Posts: 490 ✭✭beeker1

    I'm talking about families on the average industrial salary , who are above the threshold for additional support but would benefit from a higher children's allowance ! Nevermind the subsistence living of a lone parent ! After 15 years based on historical returns its a down payment for a mortgage but if you need that income to just get by then those kids are at a disadvantage and why should it always be harder for working class kids to get on the same level as their well healed counterparts !

  • Registered Users Posts: 753 ✭✭✭badboyblast

    You do realise you are in an investment section of Boards, providing for a childs future by investing money is an excellent way of providing for their future education, home life or anything else you wish to help them with.

    Just because there are people in worse off situations that dos`nt mean I don`t have any empathy towards these people or how they choose to spend their money, this is my money and I want the best for it, I don`t owe you or anyone an apology for it as I am from a working family. go to some other section with your drama and grow up.

  • Registered Users Posts: 490 ✭✭beeker1

    No empathy says it all ! Children's allowance was paid to keep children out of poverty , and specifically paid to the mother only ! Obviously you won't see the inequity of it because you're some Gecko wannabee! The state should not be financing portfolios for kids ! If you don't rely on the allowance to make ends meet then you don't need it ! And if 2009 was repeated you're attitude would probably be , well it was only the states contribution !

  • Registered Users Posts: 753 ✭✭✭badboyblast

    This is not a political thread, what I said was I do have empathy for these people, will you even read peoples posts before you hijack a thread for your own narrative!

    Paid to the mother only!! are you still operating in the 1980`s, will you at least educate yourself on how it works these days! grow up will you and stop insulting people when you know nothing about their situations. not helpful at all.

  • Registered Users Posts: 458 ✭✭ottolwinner

    Its unfair to single out this poster and his future planning for his children. There’s many families (who get the allowance )who if it were means tested would meet the criteria for it but chose to spend it in ways that won’t be scrutinised like here.
    I for one am fascinated at how people invest, It’s a whole new language to the likes of me.

  • Registered Users Posts: 490 ✭✭beeker1

    While I may not know the mechanics of how its currently paid , my point remains the same , children's allowance was paid to keep a child out of poverty , it's not that long ago that children were regularly taken into care by the state , where's the social justice , I'd rather see the allowance doubled for the families that rely on it as against it being used as something to speculate with in the stock market ! You only risk what you can afford to lose ! A world you'll never know when all you do is subsist !

  • Registered Users Posts: 4,096 ✭✭✭The Ayatolla

    You’re in the wrong thread and forum.

  • Registered Users Posts: 3,666 ✭✭✭Buddy Bubs

    You're ruining this thread, it's off topic. The OP isn't living hand to mouth and you seem to think they should be apologising for that. They are providing for their child, just not spending it the minute they receive it.

  • Moderators, Category Moderators, Arts Moderators, Business & Finance Moderators, Entertainment Moderators, Society & Culture Moderators Posts: 18,281 CMod ✭✭✭✭Nody


    Politics forum is here for the debate on child allowance usage; the discussion in this thread stops here.

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  • Registered Users Posts: 5,093 ✭✭✭Padre_Pio

    Trade republic let you set up recurring stock buys for zero fees.

    Might be handy as degiro will have transaction costs as you buy each month.

  • Registered Users Posts: 355 ✭✭Rustyman101

    Monthly purchases of an ETF would be a taxation nightmare with our backward anti investment tax rules unfortunately.

  • Registered Users Posts: 19,286 ✭✭✭✭Donald Trump

    In theory, could you not just start it in the child's name and manage it for them to avail of their CGT exemption/income tax limits every year? You'd need to pick the stocks though

    Or do kids not get them?

    Or perhaps Revenue don't take too kindly to that in case people use it as a washing strategy

  • Registered Users Posts: 4,096 ✭✭✭The Ayatolla

    I'd imagine (and definitely not sure of this) you can't setup a stocks & shares investment account on behalf of a child in Ireland. It would be more widely known if there was a legal loophole on this; I did plenty of Googling on it before my kids' arrivals and came up short.

    Post edited by The Ayatolla on

  • Registered Users Posts: 5,093 ✭✭✭Padre_Pio

    It wouldn't put me off doing it though, and it could be easily automated. I started recently, I might update this thread when it comes to declaration time.

  • Registered Users Posts: 221 ✭✭AnswerIs42

    The OP is putting their monthly child allowance into EFTs.

    Do you mean by the above, that the OP is setting themselves up for a nightmare tax situation down the road?

    As in, they would need to keep track of the purchase price every month and then have that data 8 years later when the EFTs are disposed to calculate the tax due?

    Post edited by AnswerIs42 on

  • Registered Users Posts: 15,368 ✭✭✭✭Supercell

    Thats a good point, Trading 212 have JAM- which only invests in large stable caps and is a proxy for the S&P 500 only it tends to outperform it over longer timescales. Its an Investment Trust, so trades like a regular stock with no deemed disposal, it would be my first choice. AFAIK its only on T212 and IBKR for Irish investors.

    Have a weather station?, why not join the Ireland Weather Network -

  • Registered Users Posts: 2,963 ✭✭✭downtheroad

    That's exactly right. Deemed disposal, painful. Although this is apparently under review by Dept. of Finance.

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  • Registered Users Posts: 221 ✭✭AnswerIs42

    So then by the above logic, EFTs really shouldn't be used for regular saving given the overheads involved. Is that fair to say?

    Or is there a platform that takes care of all the calculations and still makes it worthwhile?