under 18 - best savings account?

[Gordanus]

My youngster, aged 14, by dint of gardening, chores etc for friends and neighbours, plus birthday, Christmas and pocket money has managed to amass €500. At present it rests in a Permanent TSB "Scene Passbook" savings account, interest rate unknown. Anyone know where is the best place for it? Max regular monthly savings €5.
(Or is it better off spent? But trying to encourage a savings habit.)
Thanks.

 

[z108]

Maybe you could have a look at Rabos mutual funds ? The minimum investment at Rabo is 100 euro and youngster would have own capital gains tax allowance each year which would take care of tax (verify this with rabo) and not only that but I d say theres a fair chance of capital growth by the time he or she is of college age and could come in useful around that time.
For a sum of 500 or less rabo seems ideal.

 

[CCOVICH]

Rabo funds are not subject to CGT-they are taxed on a gross roll up basis, no annual exemption applies.

 

[Gordanus]

Hello Sign, Ccovich - what's a mutual fund? Is this what Rabo calls an Investment Fund (Chinese Equities, European equities, etc) ?
And what does "taxed on a gross roll up basis, no annual exemption applies" mean? (I understand the words but the sentence doesn't make sense to me! )

 

[ClubMan]

what's a mutual fund? Is this what Rabo calls an Investment Fund (Chinese Equities, European equities, etc) ?

More or less. If you know what a "unit linked fund" is then that's basically what all of these collective investments are.

And what does "taxed on a gross roll up basis

The money invested (hopefully) earns growth over the years. This growth is not taxed until you exit the fund at which point 23% of the growth (not the original investment) is deducted.

Note that Rabo do not do this automatically, (as far as I know) gains are assessable for CGT (20% on any gain less allowable expenses/allowances) and not this 23% exit tax and you are on your own in terms of dealing with the tax issues.

no annual exemption applies" mean?

Normally if you buy an asset (e.g. share) and sell it for a profit then the gain is assessable for CGT but you can first deduct allowable expenses and an annual CGT allowance of €1,270 when calculating the tax due. With most unit linked funds this allowance is not relevant as above.