News Best investment for children: Stay away from expensive offers
Tuesday, 20.10.15 , written by Juliane Wellisch With low interest rates, finding the right investment for children is more difficult than ever. In the process, more and more parents and grandparents want to make provision for the next generation so that they will not have any money worries when training or moving into their first home. But when saving for the child, there are also investment products, which are one thing above all else: expensive. > Investment for children: In 2015, low interest rates are driving returns
The best investment for children has been sought by Stiftung Warentest for the magazine Finanztest (4/2015). It shows that those who want to save for their own child, should stay away from so-called training insurance . Although these are designed specifically to help the child, most products are bad value for money. Above all the high costs have a negative effect. But since at the same time the classical investment is often not very lucrative , the experts of Stiftung Warentest check possible alternatives.
Provision for the child: investment with good return opportunities
Parents and grandparents, who are willing to accept certain risks when investing to raise a higher return, should resort to index funds (ETFs) . These are investment funds that track specific stock indices such as the DAX. Since an index fund does not have to be actively managed, the costs are usually limited. ETFs can also be used as savings plans for investment. It is not a one-time high contribution, but one agrees as savers a monthly payment .
For index funds, parents need to be aware that capital market turbulence can lead to losses in value. On the other hand, the return expectations are also correspondingly high when the shares are flying high . As the investment for the child is not a short-term investment, losses in value can usually be compensated.
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Saving for the child: investment particularly safe with a deposit
Parents who want to play it safe are well advised to invest in a child’s money account. However, this form of investment currently offers only low interest rates. However, the savings thanks to the Deposit Guarantee Fund are absolutely safe . In addition, parents and grandparents can decide for themselves when to deposit money and how much. When choosing a suitable time deposit account, it is important to pay attention to the agreed interest rate: direct banks usually offer the best conditions.
Service: Now you want to ensure the financial security of your child? Request a non-binding offer for investment and find the right investment form.
Stumbling trap interest income
The Stiftung Warentest warns when investing for the child from a costly pitfall. Because offspring is covered by the parents in the statutory health insurance for free family insurance, the monthly interest income must not exceed the threshold of 405 €. Otherwise, health insurance contributions will have to be paid for the child.
Pay attention to investment flexibility for the child
Savers need to be careful with fixed term accounts at maturity: For example, if a term of five years is compatible, this will be extended at maturity depending on the terms of either one year or another five years. Forgetting parents to cancel the time deposit account in time , the capital in the worst case at the beginning of training or when moving into the first apartment is not ready. As an alternative to fixed-term offers, according to Stiftung Warentest, there is also savings through cooperatives. These offer, for example, savings accounts whose interest rates are well above the level of savings accounts at banks or savings banks . Here it pays to ask local housing cooperatives for savings.
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- Juliane Wellisch
- editorial staff
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