Investment for child's future

D

Deimos

Registered User
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Hi

I'm dad to a 1 year old and we have been saving his allowance and adding to it ourselves since he was born.
This is something we would like to do to help him with his future, whether that's a down payment on a house or education.
Leaving it in a bank is just not going to give the returns we like, compound interest is a beast :)

I've had a look around but have found little to no information. Or all US / UK based.
I don't know enough about stocks to jump on degiro or Revolut, I'd feel really guilty if I lost his money.
So I'd like to know what my options might be, are there funds ii can buy into like a pension?
And add to it on a monthly basis, add gifts from relatives etc.

Thank you
 
Are you thinking of putting the investment in your child’s name, or in your own? One thing to consider here is whether you would want your child to turn 18 and suddenly have access to a large sim of money. Some teenagers would be wise and save it, most will not.

My plan is to have plenty of savings available to help my children study how and where they want, help them buy a first car, first home etc. The general advice when investing is not to separate your capital into pots, rather think of it as one big pot and manage diversity/risk across the whole thing. With this in mind, there are loads of threads on AAM about how to sensibly invest for the long term, covering things like investment funds, life company funds, ETFs, government savings products, Revolut, DeGiro etc.
 
Humans love the jam jar approach to savings and investments - this is the holiday jar, this is the new car jar, this is the kids education jar,...

In reality, money is money and doesn't know or care what jar it is in

But if it helps psychologically to save using jam jars, then it is certainly better than not saving at all
 
It's not about jam jars, we are investing in our pensions and after that trying to pay down the mortgage as soon as possible.
My concern is that if it's in our names that he may have tax implications at time of withdrawal.
You are right, at 18 / 19 he may not make the wisest choices but that's my job as a parent to teach him and stand back when it's time for him to spread his wings and hope that he has the information to make the right choices.

Thanks for all the advice so far.
 
Are there investments that would only let them access it at 21 or older? Most 18 year olds aren't looking to buy houses and speaking from personal experience regret the financial decisions made at 18!
 
My daughter was 25, 3 months ago. Her present was the proceeds of an Endowment policy maturing at circa 10000 euro. We wrote it in trust for her at the time she was born. The proceeds were paid to her. She was very happy. I'm glad we went to age 25 instead of 18. She is more mature and most of the silly spending on booze, boozy holidays, mad clothes is out of the way. She has an appreciation of money. she is free to do what she wants with it but I think she is at the age that she knows how hard it can be to accumulate such a sum. I agree, go with a regular savings policy with a life company if you can afford it. Remember other children come along. What you do for one, you feel compelled to do for the other. so don't overstretch yourself.

When I was 21, I was given a cheque for 100 punts, the proceeds of a policy my mam had taken out for me when I was born. She died when I was 9. I wasn't aware of the policy until my Dad gave the proceeds to me. I was so moved and grateful. Like a present from heaven. It brought her back into my life. I used it to part fund a trip literally around the world with friends. She gave me a present of great memories for the rest of my life. :)
 
Deimos said:
My concern is that if it's in our names that he may have tax implications at time of withdrawal.
You are right, at 18 / 19 he may not make the wisest choices but that's my job as a parent to teach him and stand back when it's time for him to spread his wings and hope that he has the information to make the right choices.
Click to expand...
It’s not really about how well you parent, humans just mature at a certain rate and at 18 we’re not there yet in my experience. And it’s not just about them wasting the money, there are worse outcomes than that which happen in the best of families.

On the tax, note you can give up to €335k tax free in their lifetime plus €6k per year every year (plus another €6k to their spouse). Depends on the sums of money you’re talking about, but for most it shouldn’t be a major concern. I’d pay the small bit of tax to avoid the potential pitfalls of dropping a load of money on the wrong child.

Just me of course!
 
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