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Four Ways To Deposit Money For Kids

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1 | The Classic: The Savings Account

Four Ways To Deposit Money For Kids. Generally speaking, savings accounts are not a good idea at the moment. Interest rates are so low that they are below the inflation rate. In this way, the real value of the money disappears, and in the end, less of the savings amount remains than was deposited. However, there is an individual savings account, and savings account offers, especially for children, which entice with interest surcharges or bonus payments.

The interest on such offers is often capped. For example, you get 3% interest on the first € 500, while everything above this amount earns interest underground. In some instances, however, such a savings account can still make sense, for example, to keep small monetary gifts safe.

CAUTION! : Banks can change the interest on the savings account. Should interest rates be lowered, you will find an alternative as quickly as possible so that you do not know that your savings will yield even worse interest rates.

2 | Daily Allowance For Children

Call money accounts offer a very high degree of flexibility. There should be money here that is needed promptly. So as the child’s 18th birthday approaches, it would help if you shifted the capital from long-term investments to a call money account so that it is available soon. Even small gifts of money can initially be parked in a call money account. As soon as a large amount of money has accumulated, it should be invested elsewhere.

3 | Fixed Deposit For Children

On the other hand, an enormous sum can be deposited on a fixed-term deposit account. The interest rates are higher here than with overnight money. Fixed-term deposits (as the name suggests) are also less flexible. However, fixed-term deposit rates are currently also affected by the generally low-interest rate level. Fixed-term deposits with a term of more than five years are currently not recommended as you would not benefit from an interest rate hike.

4 | ETF Savings Plan For Children in the Junior Depot

Stocks are an investment option for children, even if many people do not dare to go public due to the volatility of securities. But especially with a long-term investment horizon, fluctuations in value can be balanced out and ultimately generate a higher return than with low-risk investments.

Junior Depots are, custody account is a bank account that contains securities such as stocks or fund shares. Since it is specifically for children and is run in their name, may not include high-risk, speculative securities.

Which investments should you avoid for children?

Many investors suggest that training insurance as a financial investment for children. These are insurance policies with high costs and little flexibility. The same applies to letters of protection. In general, consumer advocates advise saving and insuring separately, as combination products usually have more unsatisfactory conditions. A home loan and savings contract is also a bad investment for children. A home loan and savings contract usually only pays off if you want to build your own home in the future, and who can tell whether a child will want to do that at some point? Besides, interest rates are currently also low here.

Even with classic bank savings plans, only low-interest rates can currently be earned due to the low-interest rate phase.

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