Savings accounts for young children

24 posts in this topic

Posted

I still haven't gotten around to opening up a savings account for my daughter, now 18 months, but have been meaning to do so. Her little sister will be arriving soon and I am thinking of opening up an account for each of them and putting in any cash baby gifts etc. (retroactively for Baby #1!)

I have googled a bit but haven't found much -- does anyone know of any good offers for savings accounts for children (Sparkonten)? I'd like something with no annual fee where we can put in small sums periodically (i.e. birthday and Xmas gifts etc.), hopefully with at least some minimal interest!

Also, are there any tax implications to opening up a bank account for a minor?

(Moderator--if you think this belongs in Family Life rather than Finance please move!)

0

Share this post


Link to post
Share on other sites

Posted

Remind me to tell you about a mutual fund account for kids. My son has one. Now I have to get back to the Bday party at the neighbors.

0

Share this post


Link to post
Share on other sites

Posted

We went to our local Sparkasse and got a good deal.We joined a ' Sparkonto Extra'.We pay in € 25,56 every month and the girsl get normal interest plus a goodie.The goodei ranges year to year.Eldest is 12 now and will be getting 2.5% intrest and then a goodie of 35% on the amount paid in the year.On a pay in of €300 she will get over € 160 this year

0

Share this post


Link to post
Share on other sites

Posted

Remind me to tell you about a mutual fund account for kids. My son has one. Now I have to get back to the Bday party at the neighbors.

Eurovol, could you give us some more info about this mutual fund. Thanks.

We went to our local Sparkasse and got a good deal.We joined a ' Sparkonto Extra'.We pay in € 25,56 every month and the girsl get normal interest plus a goodie.The goodei ranges year to year.Eldest is 12 now and will be getting 2.5% intrest and then a goodie of 35% on the amount paid in the year.On a pay in of €300 she will get over € 160 this year

Mik, is this Sparkasse account is the one you have? I presume the €160 you mention is made up of the 35% of €300 plus the 2.5% (although it looks like they only pay 1.21%) on the total in the account.

1

Share this post


Link to post
Share on other sites

Posted

Hello,

I was looking for opening kids saving account for my 18 months and 5 yr kid. Can somebody share their views on it. The basic idea is to fund for their education.

Regards,

sonhi

0

Share this post


Link to post
Share on other sites

Posted

I suggest you open a Tagesgeld account for each.

This is an account where you can take out money any time, there is no restriction.

Have a look in this comparison by Modern-Banking.de, the banks that have a "Ja" in the line "Kontoeröffnung für Minderjährige" will also open accounts for minors.

RaboDirect, for example, which is in the first position at the moment and offers 2% per year, will open an account for a minor.

0

Share this post


Link to post
Share on other sites

Posted

This is an account where you can take out money any time, there is no restriction.

Whilst interest rates are generally miserable at the moment you will not be locked-in to a low rate forever & when they do eventually increase you will get the benifit or can move elsewhere.

0

Share this post


Link to post
Share on other sites

Posted

There are one or two banks (I think we ard at the commerzbank) taht will open you a childrens account and give you €20 or so Startkapital. We have bog-standard savings accounts (@ 0,5% or whatever) for collecting birthday money and similar for our 4 yera old and 9 month old, but the grandparents have taken out a formal saving scheme which is usually known as a "führerscheinkonto" which aims to save enough to pay for driving elessons at 17 or whenever. Ihavent done the sums but I would guess that the cumulative interest from such a scheme would beat the interest on any account.

0

Share this post


Link to post
Share on other sites

Posted

This topic is on my mind these days too. Does anyone have any input on the type of scheme pog451 mentions above? In the U.S., the money market accounts you can open for children are designed to accumulate a heck of a lot more than just a "Führerschein." They are "college savings accounts."

I'm looking for something of this nature. I'm about to move back to the U.S., where my living costs might initially go down due to support from family (free housing...). My ex-husband and I are both hand-to-mouth freelancers and have never managed to save any money. He does, however, manage to faithfully pay his €300 child support. I'm thinking, if I don't need the money, where could I have him put it in order to save some decent capital for the day our daughter will need it? He actually already spent one year doing this and tells me there is €4,000 on a "Paypal account," which sounds to me like a pretty useless (and, for her, inaccessible) place to have it. Note, he's not a "money person," but there is no antagonism between us and I trust him not to steal money from our daughter.

The account would need to

- be opened on HER behalf

- not require monthly payments on a specific date (he needs flexibility as he often can't pay, or at least not on time)

- earn some decent interest

- be accessible for emergency funds on her behalf (not sure what that would be: medical costs? maybe not necessary)

- have a term of about 10 years, since she's 9 now

- be something smart that the type of people who actually know what they are doing (unlike me) would do.

I'm hoping the wise money wo/men out there will have some advice for me!

0

Share this post


Link to post
Share on other sites

Posted

A Wüstenrot guy was bending my ear last week about Kinderbausparer. There are no fees, decent interest rates and a loan option (car, education) at the end.

0

Share this post


Link to post
Share on other sites

Posted

No fees and decent interest rates, Imosdal? Can you give more details?

0

Share this post


Link to post
Share on other sites

Posted

John g., PandaMunich, from reading the links above, there is no risk of me being interested in a Bauspar plan. I guess I was thinking along the lines of a balanced stock portfolio with low fees and decent interest. Is the market for this such crap here that I would be better off persuading my ex to give ME the money in order to invest it into a U.S.-based fund. Like I said, we trust each other and all that, but he loathes handling money and doesn't believe in profit. He might view my suggestion as a hostile display of American greed.

If a long-term, balanced risk, low-fee, decent-interest, and socially conscious stock portfolio is not available here, then perhaps it would at least make sense to shift the money from this "Paypal account" he's got it on to a child's savings account with an honest (?) German bank...

What do you think? Thx.

I'd even be happy to take some ribbing, if it is as helpful as the stuff you guys dished up to flouncer James81 on this thread: Need a pointer on tax for relocating to Germany

0

Share this post


Link to post
Share on other sites

Posted

Thanks, john g., you've got me pegged: I'm definitely the "Öko-fonds" type. Sustainability, environmental responsibility (oh, and I like that they don't handle in the sale of weapons and people--who knew you could invest in the slave industry??)

0

Share this post


Link to post
Share on other sites

Posted

It´s also a nice example of an equity fund for employees who get a VWL (Vermögenswirksameleistung ) from their employer ( up to 39 euros a month in some cases ) - investing monthly and long term and making use of the ups and downs ( volatility ) to earn decent money. Check out the term " Cost Average Effect "! It´s also one of the stock portfolios I have in my Rüruprente.

I like the idea of environmental and social responsibility and sincerely believe this type of investment is indispensable long term. ( Ageing hippy here! ) :D

0

Share this post


Link to post
Share on other sites

Posted

I am sure my dear colleague John_G will agree with me on this additional info: if you want to invest more or less regularily 300 EUR p.m., you could and should - for simple risk diversification - split this investment into several investment funds. Usually you can set up a savingsplan for good managed funds like the one that John already mentioned at 50 EUR p.m. - thus you could set up a savings plan for 6 different funds with different managements and not too likewise goals and strategies (in order to avoid cluster risks). There would be even a decent chance to put 100 EUR out of the 300 EUR each month into an investment savings plan for tangible asset - but it would require some good and fair info for you about the pros and cons of this to see if you would be suited for something like that at all (though certainly for a child where the money only needs to be available in 10-15 years or so, I would both personally and professionally find it suitable indeed).

If you set this up with a halfway decent bank/provider you'll also get a kind of credit line (socalled Lombard) in case you suddenly need cash for a short while at favourable conditions/interest so that you don't need or become endangered in having to sell any such investment funds at the wrong time.

Bauspar for a child is probably the most stupidest thing I can imagine from a professional advisors point of view, though it would sure generate a nice commission to the salesperson.

Cheerio

0

Share this post


Link to post
Share on other sites

Posted

Totally agree, Starshollow! Diversification is the name of the game! I put that example of an equity fund because I knew it would appeal to justanne! There are many other socially responsible ones around!

Bausparen for a child? Yep - repugnantly stupid!!

0

Share this post


Link to post
Share on other sites

Posted

Here's the blurb. It was about a Jugendbonus of 300 euros and wasn't related to a property purchase. I'm certainly not advocating it. I only had the info because I was cancelling my account with WüRot and they felt compelled to push some flyer into my hand and tell me it was 'der Renner'.

Your PC/green fund sounds much better. I'd like to invest in ebikes or an e-car/bike fund if anyone has something they like.

0

Share this post


Link to post
Share on other sites

Posted

@Imsodal: the vid you related to shows that you can put a lot of money into the Bauparplan for the kid (from parents, grandparents and uncles and what not) which is true. it is also true that instead of buying/investing in real estate later, you can use the money for world-travel, college fees or what not.

What they don't tell you about is the piss-poor (excuse my French) yield even under normal circumstance of the invested money, which becomes entirely negative if you use the money for something else but investing in real estate. upfront costs, the below-market-rate for interest while saving money etc makes it a bad deal for everyone and to offer it for children is, in my opinion, bordering on the criminal.

I just beg you got get a real quote from this guy, send a copy to John and me and we'll give you here on this forum a fair and unbiased feedback - might help a lot of people to escape similar sales-pitches in the end.

What say you?

Cheerio

3

Share this post


Link to post
Share on other sites

Posted

Thanks Starshollow. We've ended our little short term (18 month maturity) BS plan and opted not to take the loan. We secured a 5 year mortage at a good rate (5 years ago) and added the BS as an interest security / discipline measure to keep our hands off a chunk of severence money (came unfortunately 1 month after closing on the apt) while we were on the dole (Company shut down, moved east). I (wife) had invested 'X' in the apt. by liquidating my mutual funds in the US and the severence pay (husband's) was also 'X' so it was all about partnership, family and marital bliss being maintained during this major transition phase: job hunt, new 2nd child, Altbau renovation -- of course the inlaws said it was the worst possible time to buy but I insisted owning a place allowed us to plan our financial future. We bought a fixer upper (which again completely psychologically overwhelmed the inlaws) for 2500€/sq meter and I think its appreciated a bit -- but we won't be selling because the rent would be at least half again as much as the mortgage payment. We renegotiated last week with InterHyp (DSL) at 3.5% effective. Never again Bausparer--- I've chucked the brochure in the meantime but thanks for your offer. I may be in touch about funds another day. Cheers, L

0

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now