Saving Account For My Son's Future

chatterbox

Hi All.

I want to start savings for my son's future, so I'm reviewing some of the options available. The only real long term product that appears to be the 10 Year National Solidarity Bond.

Is this the best option ?? or is there more out there.

Would be great to hear what other people are using.

Moonbeam

Mine all have credit union accounts.

pwurple

Interest rates are low at the moment, so not much on offer return-wise.

Rabo, KBC and EBS seem to have the best savings rates at the moment.

I use bonkers.ie to compare rates
http://www.bonkers.ie/compare-savings-accounts/

If you can afford it, there are special savings accounts that you can put the childrens allowance in as well, tax free. It locks the money away though.
http://www.statesavings.ie/products/Pages/ChildcarePlus.aspx

chatterbox

Thanks pwurple,

I was looking at the state saving 6 Year Childcare Plus account when I came across the 10 year National Solidarity Bond

http://www.statesavings.ie/products/Pages/NationalSolidarityBond.aspx

The return seems pretty good considering how poor current rates are, and access to the money isn't locked.

Do you think this is a better option ???

Orion

I'd say credit union too.

Junglewoman

Prize bonds as an alternative?

NapoleonInRags

If its a regular savings account you are looking for I would stay away from the Nationality Solidarity Bond. The way they work is you buy bonds and they mature ten years later. So if you put a certain amount in every month, the bonds mature 10 years after you put each installment in - not ten years from when you open the account. They are therefore totally unsuitable for regular savings over a number of years and are more suited to someone with a large amount to put away up front.

pwurple

I don't know whether the childcare plus is better. You'd have to do the calculations for the amount you want save against each account type. The childcare plus is set at the 130 per month for the child I think. So nothing less or more. They do a holding account for a year first as well.

Prize bonds are one of the lowest rate returns, so I'd avoid those. They have cut payouts again recently.

Credit unions are all different. Depends on your local one, but you get shares dividends rather than interest, so you don't know the rate in advance, and it's taxed as well. My local one doesn't give much return, but I have an account just in case we ever want to borrow from them (and they are quite nice to deal with! )

The Princess Bride

We always had the children's allowance transferred into the Childcare Plus account.
We intended that it would be the college fund for them, as we knew that the "free" (ha!) education would be long gone by the time ours reached their teens.
We never missed having it to spend, as we never had it.
We looked at it as an extra rather than a "given" allowance.

Our oldest started college last year and the second will start, hopefully, this Autumn.
Was well worth saving it, and at that-it probably isn't enough.

Each of ours also had their own personal savings account with AIB, and always lodged birthday/other monies from a young age.

It does depend on the age of your child, Chatterbox.^^^^This suited us as each year it is automatically transferred into another account, and at the end of 5 years, you are contacted and asked what you wish to do with it.
ie: cash in or transfer into another savings account.

I would recommend every parent to start some savings plan for their child, as those toddler years soon turn into teen years, and that's when the €€ start flying out of the banks.I'm not talking hundreds either-it's thousands.

Xidu

Why would anyone consider saving in bank for long term now at the stage of very low interest?

If you have more than 15k to save, I would suggest you to put in capital protect fund, you won't lose your investment, only risking your small interest, if the situation is good, you could gain 10-30% before DIRT.

If you want to save certain amount every month, then I suggest you the instant saving account in BOI, 2.75% before DIRT, the good thing is you can withdraw anytime with no penalty. So if someday interest goes up, you can switch easily.

Boom__Boom

Orion wrote: »

I'd say credit union too.

I'd definitely recommend having a credit union account as there are pretty good death benefits ( a bit grisly I know) which can be a nice bonus down the line should the worst happen. Never knew about this until I was executor for a relative and saw the benefits.

Every member gets a set death benefit - this can vary from one credit union to another but I think the gist is that it's usually at least a grand. Think the estate I had to deal with got €2,600 iirc.

Also credit unions offer insurance on life savings, which basically is related to the amount of savings and the age the time the money is lodged. What happens is that - you can get a few thousand extra savings from this [ ended up getting something like €3000 extra on an account which had €4000 in it iirc]

Basically the estate got 5 and a half grand extra plus the 4 grand that was in savings.

You're not going to get massive amounts (pretty much all places have limits on the maximum you receive) but it can be an nice extra bonus in the worst case scenario.

I'd recommend using this as one part of your strategy as the benefits especially in case of death are very decent. It has the advantage that you can save small irregular amounts (maybe set up a direct deposit to a another account and make deposits to the credit union account when you have a bit extra to spare)

pwurple

That death benefit thing from the CU makes more sense for a savings account for an adult or elderly person than a child though boom_boom?

Boom__Boom

pwurple wrote: »

That death benefit thing from the CU makes more sense for a savings account for an adult or elderly person than a child though boom_boom?

It's a parent saving for a child - and the death benefits are basically a form of extra life insurance.

If the worst does happen to a parent and the child is still young (say under 20) then every penny the parent leaves will make things easier for the child. Once a child is over that age at least they have the option of being able to fend for themselves whereas up until then there is little if anything they can do.

This is an area where being prudent and adopting a conservative worst-case-scenario makes more sense as opposed to just assuming you're going to live to 75 plus. Very few people expect to die before they reach 70 but the cold hard fact is that substantial amounts of people do every year.

Plan for the worst ; hope for the best.

pwurple

Boom__Boom wrote: »

It's a parent saving for a child - and the death benefits are basically a form of extra life insurance.

If the worst does happen to a parent and the child is still young (say under 20) then every penny the parent leaves will make things easier for the child. Once a child is over that age at least they have the option of being able to fend for themselves whereas up until then there is little if anything they can do. .

I understand planning, believe me our will is reviewed yearly, plus lists of any insurance, and other policies... I'm reasonably financially prepared to be clobbered by a tornado. My larger fear is to be incapacitated in some way, where one of us need long-term medical care for a further 40 years, but can't work to provide for it. We have critical illness cover, but I hear claiming from it is an ordeal in itself.

But just to be clear for people, what you are talking about only works when the account is in the parent's name.... and NOT the child's name.

chatterbox

Thanks all for the great feedback and advise... I think after reviewing it all I might go with following approach

How does this sound ?

For his future..

- Open Childcare Plus account for his child benefit and leave it collect away in the background for 6 years. After maturity move it onto another safe option account.

- In the meantime use my credit union account to hold and extra lump sum money I can save up - I never really use this account, so I won't be tempted to use it for myself


For his day to day..

- In a few years open up his own junior bank account so we can bring him up in a environment that he can see be benefit of money management by letting the child get involved and interact with us on the management of this account.

Now all I need is some money

The Princess Bride

Sounds like a sensible plan.
I don't know how old he is ,Chatterbox,but you can open his personal account tomorrow with only a few cents.It doesn't matter if you don't get back to lodge for another year,but as he gets older,you can show him how it's been added to and how important it is for him look after his pennies,as you have done.You could start with a jar,putting loose change in it?

My 2youngest are so sensible with money,without being stingy,and have significant funds,thanks to starting early.
They always loved going into the bank after birthdays to lodge their €€.

Best of luck-believe me,these years fly-one of my babies is 17 today.
Now that is scary!

pwurple

That all sounds reasonable chatterbox, and really great that you are giving them some knowledge of financial products! So many parents don't bother. Good on ya.

chatterbox

His only 3 months old .. so hopefully he will have plenty years of financial planning ahead

Aethan Dor

Thanks for starting a topic that's helped me too, we are doing the NSB for our girl but clearly weren't aware of how it works fully, after seeing what you learned here I'm going to review our plans too !

chatterbox

No problem, I was like you going for the default long term option...but this thread was very informative... best of luck with your saving.

LegacyUser

I opened the 10 year NSB 4 years ago for my child and was paying €150 into in every month. However, like another poster said, it is far more suitable for a lump sum investment at the beginning. Also,when you take inflation into account, it is no longer a good deal now that the rates have reduced so much. As such, I am no longer paying into it.

I am now saving €300 a month now in a regular savings acccount (€150 each for each child) and am planning on buying them a house as an investment as soon as I have enough saved for a deposit. I would rent it out and also use my savings of €300 per month to pay more off the mortgage and to pay for expenses such as property tax, etc.

If you are considering long-term savings, you need to take inflation into account. Most regular savings accounts will not be suitable for this in my humble opinion. It might be worth talking to a financial advisor (don't go to a "free" one).

KCC

Guest1234558 wrote: »

I opened the 10 year NSB 4 years ago for my child and was paying €150 into in every month. However, like another poster said, it is far more suitable for a lump sum investment at the beginning. Also,when you take inflation into account, it is no longer a good deal now that the rates have reduced so much. As such, I am no longer paying into it.

I am now saving €300 a month now in a regular savings acccount (€150 each for each child) and am planning on buying them a house as an investment as soon as I have enough saved for a deposit. I would rent it out and also use my savings of €300 per month to pay more off the mortgage and to pay for expenses such as property tax, etc.

If you are considering long-term savings, you need to take inflation into account. Most regular savings accounts will not be suitable for this in my humble opinion. It might be worth talking to a financial advisor (don't go to a "free" one).

I posted the above earlier (didn't have my password to hand). Just to add to this: you might want to cast your net wider than this forum when looking for advice on this. Take a look at the threads on Biz/Personal/Banking Insurance & Pensions and check out askaboutmoney.com.

cbyrd

I used to have a bank account for my kids..now i buy silver.. it's going up in value and i have it all in my view and its not making any money for anyone but me.. its a minted coin every month..

KCC

cbyrd wrote: »

I used to have a bank account for my kids..now i buy silver.. it's going up in value and i have it all in my view and its not making any money for anyone but me.. its a minted coin every month..

How do you buy that?

minusthebear

+1 for the credit union.

a relative died a while back, they wiped her loans and doubled her shares as a death payment to us. I was stunned.