Hi all. I have quite a specific question about opening a 10 Year National Solidarity Bond for our son, or indeed for any alternative savings account.
We have a lump sum of about €5,000 which we want to put away for him with things like college in mind. With 'cash' deposit rates as bad as they are, the best option I can find that keeps the capital safe is this 10 year bond. (Currently 16% after 10 years which is 1.5% AER.) I know there is a risk that if interest rates improve significantly, we may feel locked in at a poor return, but the way I see it, if they improve enough, we can always cash it in, take the interest penalty hit, and put the money where it will perform better. My wife is quite risk averse with money so I'm happy to use a cash deposit this time. Maybe we will go with a somewhat less risk averse investment if/when we have another lump sum to invest for him in the future.
So my question is, can anyone suggest whether it is better to open the bond in our son's name, or one of our names, and why? For example, I could foresee a scenario where they send a letter out in 10 years time saying this bond is about to mature and here are the sums of money involved. If he gets to the doormat first, and it's in his name, he'll surely open it (so would I). My wife doesn't see this as any problem but I tend to think it may be easier if he doesn't know about it until he needs to, e.g. when we hand it over for college.
On the other hand, if it were in my name and I was to die, I'm thinking would there be potential problems e.g. inheritance tax thresholds etc, because the money appeared to be 'mine'?
Or something else I thought - if for example child benefit becomes means-tested in future, savings which appeared to belong to parents might cause problems.
The application form only gives options for the following
- sole applicant
- joint applicants (e.g. presumably married couples etc.)
- minor with parent/guardian as signatory (but, I presume, it is in the minor's name)
The form also mentions trust/trustee option but says you need to contact them and form cannot be used for this option.
I'd be very interested to hear if there are any pros and cons to having it in his own name or one of our own names.
We have a lump sum of about €5,000 which we want to put away for him with things like college in mind. With 'cash' deposit rates as bad as they are, the best option I can find that keeps the capital safe is this 10 year bond. (Currently 16% after 10 years which is 1.5% AER.) I know there is a risk that if interest rates improve significantly, we may feel locked in at a poor return, but the way I see it, if they improve enough, we can always cash it in, take the interest penalty hit, and put the money where it will perform better. My wife is quite risk averse with money so I'm happy to use a cash deposit this time. Maybe we will go with a somewhat less risk averse investment if/when we have another lump sum to invest for him in the future.
So my question is, can anyone suggest whether it is better to open the bond in our son's name, or one of our names, and why? For example, I could foresee a scenario where they send a letter out in 10 years time saying this bond is about to mature and here are the sums of money involved. If he gets to the doormat first, and it's in his name, he'll surely open it (so would I). My wife doesn't see this as any problem but I tend to think it may be easier if he doesn't know about it until he needs to, e.g. when we hand it over for college.
On the other hand, if it were in my name and I was to die, I'm thinking would there be potential problems e.g. inheritance tax thresholds etc, because the money appeared to be 'mine'?
Or something else I thought - if for example child benefit becomes means-tested in future, savings which appeared to belong to parents might cause problems.
The application form only gives options for the following
- sole applicant
- joint applicants (e.g. presumably married couples etc.)
- minor with parent/guardian as signatory (but, I presume, it is in the minor's name)
The form also mentions trust/trustee option but says you need to contact them and form cannot be used for this option.
I'd be very interested to hear if there are any pros and cons to having it in his own name or one of our own names.