Finally of age! Anyone who leaves their parents’ home for university or professional life needs a lot of money to move and the first few months. Pocket money is rarely enough. So that the children don’t have to start from scratch, parents and grandparents often save for years for this moment. When the little ones are big, they start off with a few thousand euros into new life. But how do parents and grandparents best invest what they have saved? The most important questions at a glance:
What name should the savings account be in?
The answer to this question is easy for consumer protection activist Niels Nauhauser: “If the money is to be for the child, then the account should also be in their name,” explains the financial expert at the Baden-Württemberg consumer advice center. If the account goes to the parents, the money belongs to them and the child has no claim to the savings. If the parents die prematurely, the money flows into the inheritance and is taxed.
When can the child access the account?
The parents or grandparents manage the account up to their 18th birthday. Only then can the children freely use their account. If you are worried that the next generation will spend the savings in one fell swoop, you can set up a payment plan shortly before your 18th birthday. The child then receives a certain amount each month until the account is empty. The payment plan can usually only be canceled if both parties agree – an additional fee usually applies. Financial expert Nauhauser advises making this decision dependent on the individual case: “If the child moves to another city to study, it takes a lot of money at once and not a monthly payment.”
Is training insurance worthwhile?
Some insurers advertise with a training insurance that is supposed to financially secure the next generation. Behind it is a mixture of capital and risk life insurance: “The name is misleading, because the insurance does not pay for an apprenticeship, of course,” clarifies consumer protector Nauhauser. It only protects risks such as the death of the parents on a smaller scale and otherwise pays the children what the parents have paid up. In addition, such insurance policies are often expensive and hardly generate any return. The financial expert therefore advises: “Insurance and investment should always be separated.”
What about ETF or fund savings plans?
Savings plans linked to a fund or an exchange-traded index fund (ETF) can also be taken out by parents in the child’s name. Consumer advocate Nauhauser advises against a visit to the house bank: “Direct banks usually have better and cheaper offers than branch banks and a larger selection.” The higher the costs, the lower the return: Whoever has to pay two percent fees for fund management per year remains only half of the four percent return.
Is the classic savings book worth it?
Despite the low interest rates, the time for the savings book is not yet over, says consumer advocate Nauhauser: “There is still some interest on children’s savings books – in contrast to products for adults.” The reason is simple: children can get in the savings account Usually the first time in contact with a bank. If they regularly bring their piggy bank past, this binds the youngsters as customers for lucrative contracts when starting their careers – that is the hope of the banks, says Nauhauser. The savings book has another advantage: By regularly saving, the youngsters get used to handling money. This reduces the risk that he, as an adult, spends everything at once.
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