Best Savings Option for Child's Education

Glen_Quagmire

Looking to set up a savings account for my daughter for college and car etc when she comes of age.

What are the best options out there, credit union, banks, or are there other options?

What would be best bank to go with if thats the best option?

Cheers

catrionanic

We opened a state savings account with the post office. You've to make a regular monthly payment by direct debit, but interest rates are much better than any other (rubbish) offering that's been offer for the last number of years.

We opened it when he was a few months old, with the plan to lock the money in and not touch it for 18 years.

Henry Ford III

If the term is right you'd probably do much better in investing.

Glen_Quagmire

Henry Ford III wrote:

If the term is right you'd probably do much better in investing.

Investing in what in particular?

Glen_Quagmire

catrionanic wrote:

We opened a state savings account with the post office. You've to make a regular monthly payment by direct debit, but interest rates are much better than any other (rubbish) offering that's been offer for the last number of years.

Never thought of the Post Office, will look into that more

NIMAN

www.statesavings.ie

Glen_Quagmire

What's the benefit of state savings over a bank or post office?

Looking at the % AER and state savings is lower than banks.

What am I missing?

NIMAN

State savings are better.

Some of them are tax free, so you get the full interest to keep.

If you save with a bank, your interest is taxed via DIRT. It's currently 37%, but due to fall 2% next year and another 2% the year after. But still you have to pay over a third of your interest earned back in tax.

Look at some of the longer terms with state savings, like the 10yrs ones, there is no bank that'll come anywhere close to the same interest levels

Glen_Quagmire

NIMAN wrote:

Look at some of the longer terms with state savings, like the 10yrs ones, there is no bank that'll come anywhere close to the same interest levels

Thanks for clearing that up.

So with the 10 year one, I can pay monthly installments of say 100 euro and continue for 10 years?

Can I take out money early if required?

NIMAN

Check out this link, it's a list of the best deposit options.

It's kept updated regularly.

https://www.askaboutmoney.com/threads/savings-best-buys.90481/

Just remember when working out how much you'd get back, not to forget about DIRT.

Best to read the t&c of the accounts, a lot of them require you to do this and that to qualify. Not sure of the top of my head which state savings account might suit what you want, but there is a 6yr one where you can lodge your child allowance regularly.

https://www.statesavings.ie/our-products/installment-savings

km79

Also looking at this
Currently have a small lump sim in credit union and 50 a month going in on top
So hoping to move the lump sum and continue with monthly installments
The 6 year one looks most suitable for this

tomfoolery60

Perhaps not the most obvious but have you considered
overpaying your mortgage? You'll not earn a better risk free return (tough in this case it's interest you are saved from paying).

The overpayments might allow your mortgage to either be paid off before they reach college (providing you with helpful amounts to support a scholar!).

If not fully paid, you could keep the term the same and have lower monthly repayments from the overpayments.

If your mortgage was 3% you'd need almost 6% gross interest or investment returns to have the same after tax return.

Unless you don't have a mortgage, in which case obviously doesn't apply!

catrionanic

Glen_Quagmire wrote: »

Thanks for clearing that up.

So with the 10 year one, I can pay monthly installments of say 100 euro and continue for 10 years?

Can I take out money early if required?

afaik, the interest rate goes up the longer you leave the money in. If you withdraw early, you forfeit the higher interest rate. So if their interest rate for 6 years is 6%, and you take it out after 2 years, you're not gonna get the 6% interest - just whatever their rate is for 2 years

Henry Ford III

Glen_Quagmire wrote: »

Investing in what in particular?

Longer term equities tend to outperform most other assets, albeit at a risk.