TIPS AND INFORMATION ABOUT ETFS, FUNDS AND SAVINGS PLANS FOR THE NEXT GENERATION
Tips and information about ETFs, funds and savings plans for the next generation. Parents, relatives and friends usually do everything they can to give children a good start in life. This also includes creating a financial cushion for adult life in good time. The classic piggy bank and especially the savings account have long since ceased to be the means of choice for building up reserves for children.
What are the advantages of investments for children?
If you invest money for your children, you can do so via an account or custody account in the children’s name. The money thus belongs to the child from a solely legal point of view and can be handled by the parents, but is not their own. In addition, you can apply for a non-assessment certificate from the tax office. The prerequisite for this is that the child’s total income does not exceed this limit.
Aside from the tax advantages, investing money on behalf of the children also has educational value. Because this is how children learn how to deal with money, investments, taxes and banks using a practical example.
What are the best investment options for children?
An investment for children is a long-term investment and should be made with low risk. In order for early saving to pay off, a moderate return is necessary. ETFs and funds are therefore best suited. Although these are generally subject to a higher risk, the broad diversification minimizes the risk to some extent while at the same time generating long-term returns. You not only have a free choice in terms of the investment amount and type of security, but you can also consciously decide on a specific investment motive – so you can make the investment something very special for your child.
When is the right time to start investing in children?
The sooner the better! Doesn’t matter how old the kid is, from a fiscal point of view. Parents will even, when they are young, spend money on behalf of an infant. But why not take advantage of the benefits and profit as early as possible from compound interest? Tiny sums can be converted into strong reserves before the infant hits the age of majority, and can then be used for a driver’s licence, a vacation or for preparation and study. The risks are still the same in theory, no matter when you start investing in an infant.
What happens when the child comes of age?
When the child reaches the age of majority, the entire JuniorDepot automatically becomes the property of the child. The child can then independently exclude the parents from any right of inspection and access. Regular payments do not end automatically and can either be continued by parents, relatives, acquaintances or the adult child himself. So-called “training insurances” or “child protection letters” are also appearing more and more frequently on the market and promise financial security for the next generation. Most of the time, these are pretty ordinary life or accident insurances that can be paid out under certain conditions. These products are usually only suitable for pure savings, as they tend to have little or no return.