Child Benefit/College Fund

E

El _Director109

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Hi folks. My wife and I have a 1 year old girl and we are trying not to spend the monthly child benefit and save it for her for when (please God) she's going to college. I was looking for advice on this, where is the best place to save or get some return on it. We would be adding to it every month. I looked into a Zurich product, medium risk tapering off to very low risk in 17 years time but I thought the fees were very high. Are there any other products that you'd recommend? How about the Ireland State Savings scheme or prize bonds? I'm fairly clueless regarding this stuff.

Thank you in advance.
 
El _Director109 said:
Hi folks. My wife and I have a 1 year old girl and we are trying not to spend the monthly child benefit and save it for her for when (please God) she's going to college. I was looking for advice on this, where is the best place to save or get some return on it. We would be adding to it every month. I looked into a Zurich product, medium risk tapering off to very low risk in 17 years time but I thought the fees were very high. Are there any other products that you'd recommend? How about the Ireland State Savings scheme or prize bonds? I'm fairly clueless regarding this stuff.
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Just a suggestion. We used the CA to put towards the mortgage. 17 years is a long forecast. With the mortgage cleared we used current income to pay for college costs.
 
+1 for using CA towards mortgage, with additional note that you should think about it as an investment with guaranteed yearly gain in the amount of your annual mortgage interest rate. And this is tax-free :)
My experience with prize bonds is a waste of time. State savings will increase your assets, but miserably low.
One 'out of the box' suggestion (albeit, not the most efficient one) - financial education is priceless, so you could invest your kid's CA in different things - like prize bonds, regular saving account, ETF, gold, crypto... in equal amounts. And once they're old enough, you sit them down and explain what they have and how each asset performed over time. This might spark their interest to learn more about investing.
 
If your living in a city with a University then the fees can be paid out of day to day expenses. I put my daughters on the credit card and cleared it at the end of the month.If this is the case you don't need to compartmentalise/ ringfence this money and use it to fund pension or mortgage etc.

The big cost is if they need to rent somewhere while studying, that's a big bill every year alright.
 
Persia said:
If your living in a city with a University then the fees can be paid out of day to day expenses.
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Also, what's the likelihood that the fees will be covered by the Free Fees Initiative and the student contribution in part or full by a SUSI grant (plus a possible maintenance grant)?

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As mentioned elsewhere I was unexpectedly but pleasantly surprised that my son's fees/student contribution are fully covered and he even gets a modest maintenance grant because only my (low in recent years since effectively retiring early) income and not any other means/assets are taken into account as part of the application process.
 
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ClubMan said:
To give a thumbs up you click the "Like/Thumbs Up" button/link at the bottom right of posts.
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Thanks ClubMan, the "Like/Thumbs Up" button/link is not showing under posts and I've tried different browsers. Strange.
As you can see I've learned to quote thanks to your post!
 
El _Director109 said:
Thanks ClubMan, the "Like/Thumbs Up" button/link is not showing under posts and I've tried different browsers.
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I wasn't aware of this when I posted above!

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I saved my children's allowances just into a regular savings account. Then if a higher interest account came along I'd put it in there.

I used it to pay for braces for their teeth and a few other things.

I don't agree with using it to pay the mortgage.
Once it's gone into the mortgage then it's gone.

You never know what's around the corner.
 
sadie said:
I don't agree with using it to pay the mortgage.
Once it's gone into the mortgage then it's gone.

You never know what's around the corner.
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Hi sadie

You are confusing a few issues here.

You should have a fund for anticipated expenses and an emergency fund for unanticipated expenses. The size of this will depend on your circumstances.

But once you have enough in this fund, whether it comes from your salary or from Child Benefit, you should put the rest to work either by paying down your mortgage or maxing your pension contributions.

Brendan
 
When our kids were small we saved children’s allowance into a state savings product. Then we stopped, kind of forgot about it, moved house, interest rates collapsed, etc.

When we needed the funds we’d left a large figure sum earning almost zero interest for six years while carrying a mortgage. Then it took six months (another story) for An Post to acknowledge change of address and to release the funds.

My advice: pay down your mortgage instead.
 
I viewed it as we should max our family wealth while balancing time horizon of spend. Saving on interest increased our wealth. If the worst comes to the worst our home is secure. If we have extra it will go towards education. If we find ourselves low on income to support education, our kids will live at home for theirs and get state support. But the home will be secured.
 
We have a Zurich Child Savings Account for our little person. It's in US equities and once she's 18 it's theirs. It will give them choices at 18, and our job between now and then is to educate them well enough so they can make reasonably well informed decisions, even if they're ultimately not the decisions we prefer.

We're both employed in the public sector and the loan to value of the mortgage is under 20% and we're within commuting distance of various universities. Obviously all that severely reduces the number of financial risks we're exposed to as a family, as well as allowing us the luxury of being able to make a couple of grand a month appear in our budget by reducing/pausing AVCs and other investments as well as the mortgage overpayments. I'm well aware that many people aren't so lucky.

If your mortgage is a burden and money is relatively tight I'd put it into the mortgage to reduce that burden as quickly as possible. For me a €150 payment means a €1 reduction in my monthly payment, and that adds up.
 
BIG-notorious said:
We have a Zurich Child Savings Account for our little person. It's in US equities and once she's 18 it's theirs. It will give them choices at 18
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Again, this is all false reasoning as a result of our tendency to compartmentalise.

You should invest the money where it is best to invest, and in your case, it is to pay down your mortgage.

If you want to psychologically assign the money to your daughter, then set up a spreadsheet and keep an account of how much you "owe her".

When she is 18, give her that amount of money.

Brendan
 
BIG-notorious said:
We have a Zurich Child Savings Account for our little person. It's in US equities and once she's 18 it's theirs. It will give them choices at 18,
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Child Savings Accoubt is specifically for those who want/need to avail of the Annual Small Gift Tax Exemption ie. they know that the child will be inheriting more than the threshold.

It's 'her' money already. You've gifted it to her. If you hadn't gifted it to her (in her possession) then it wouldn't qualify under the Annual Small Gift Tax Exemption (Section 5 of the Capital Acquisitions Tax Consolidation Act 2003). There has to be a clear audit trail for Revenue.
 
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