Kids High Interest Savings?

linoc66 on 14/03/2015 - 21:24

Hi All

I have a now 13yr old I've been banking $20 per week since birth (only around one hours pay per week for many parents) to help him out when older with Uni, house dep etc etc.

For as long as I can remember it started out with BankWests Kids Bonus Saver, then along with some of my own coin tried out the share market late 2000's and lost big time with GFC, not tempted to go that track again (once bitten twice shy).

He now has;
BankWests Kids Bonus Saver (5.50%) maxed out and once again about to go through the anniversary of all funds redeposited back into the standard low interest linked account to start the max $250p/m deposit again…

A CUA Youth Saver maxed to 5k to earn the 5.00%, anything above 5k only earning 2.75%

A First Options CU also maxed out to 5k at 5.15%, anything above 5k only earning 2.15%

Whilst there are other banking options <4% on RateCity I'm wondering if there are other institutions not listed on there for whatever reason that I may not be aware of?

Also interested in any other thoughts/suggestions, whilst share trading scares the crap out of me now perhaps there are safe long-term options paying dividends etc (Westfarmers, BHP etc).
Would love to purchase an investment property (my own is paid out) however believe there's no way not to have it (& shares) in my name therefore more taxable income, asset tests, child support etc etc….

I'm aware his stepping into paying tax, not sure how to avoid it, however his circumstances are different to mine, in the end if his paying tax his making money.

For simplicity I'd "prefer" to keep his funds separate from mine.

Thanks for any advise

Cheers All ;-)

Financial

Comments

  • GnarlyKnuckles on 14/03/2015 - 21:51

    In a related question, can I open up any of the above-mentioned accounts in my young son's name, put 5K straight into them, and start earning 5% interest on that cash? Or is it not that simple?

    • linoc66 on 15/03/2015 - 04:10

      Yes u can, if u dnt live near one of their branches simply fill out the application form take it and their birth certificate plus a copy of it down to the the post office, get the forms witnessed and post them off.

      • GnarlyKnuckles on 15/03/2015 - 04:12

        Excellent, cheers.

        • linoc66 on 15/03/2015 - 04:28

          Just an extra note, I believe CUA is only applicable for 13 to 18 years olds
          The other two should be fine for under 13

  • Peanut money on 14/03/2015 - 22:00

    A CUA Youth Saver maxed to 5k to earn the 5.00%, anything above 5k only earning 2.75%

    A First Options CU also maxed out to 5k at 5.15%, anything above 5k only earning 2.15%

    Do these guys ask for a TFN of a parent?

    • linoc66 on 15/03/2015 - 04:15

      No request for TFN, however with my daughters accounts who's now 17 and working part-time whilst at Uni somehow tax gets taken out of her accounts monthly even though only I have authority over them.
      Work out how that happens?

      • spychiatrist on 15/03/2015 - 12:04

        Don't you have to declare the interest earned from child accounts?

        • linoc66 on 15/03/2015 - 15:02

          https://www.ato.gov.au/Individuals/Income-and-deductions/In-…

          Briefly…
          The funds are part of his "pocket money" earnings for chores at home, performance at school etc, his now old enough for the accounts to be in his name not in trust, his money, not mine.

          Whilst funds are transferred between accounts/institutions to optimize interest earnings they have never been used for anything, just keeps accumulating and will continue to do so until his 18. His aware of all this, whilst at times he'd love to get his hands on it understands its for his future, very mature smart kid for his age, unlike his oldman was at his age.

  • Ace26 on 14/03/2015 - 23:04

    in case you consider managed investments a suitable option and if savings are definitely used for education then consider this

    Tax effective savings

    • linoc66 on 15/03/2015 - 04:22

      Will do some research on Lifeplan however its likely similar to something I looked into when the kids were very young, not knowing if I'd get value if they dropped out early.
      From my knowledge the investment/returns are only for education, I don't get a return if my injection isn't absorbed

      • Ace26 on 15/03/2015 - 22:58

        not entirely correct.

        Say your investment returns $100, then funds pays $30 in tax and $70 to your account.
        If you were to access money for eduction you get all $100 (including tax component) but for any other purposes you will only get $70. So it's not like you lose everything if the kids drop out, it just means that it won't be that cost effective. (If not used for education this becomes like any managed investment but has the non reporting requirement benefit)

        Another beauty is that you don't have to report investment return each year as assessable income so it will help you tax wise if your effective tax rate is above 30%.

        Read though the website, but if you are looking to invest for long term and are willing to take some moderate to high risk then look in to this option.

  • grb1234 on 15/03/2015 - 19:00

    Put it in your home loan offset and track it with a spreadsheet. Anything else and you're essentially losing money.

    • linoc66 on 15/03/2015 - 21:18

      As said in OP "(my own is paid out)"

  • horsome on 15/03/2015 - 22:27

    Talk to an accountant perhaps?

  • Peanut money on 16/03/2015 - 13:09

    If you see a financial advisor ask them about insurance bonds. My understanding is that they are a long term tax free option.
    Watch out as some financial advisors lean you towards the product were they make the most commission.
    IMO capital preservation is what does if for me in this climate.
    I normally buy shares when everyone is getting out of the share market and sell shares when everyone's buying.

    • tomclancy on 16/03/2015 - 15:00

      I normally buy shares when everyone is getting out of the share market and sell shares when everyone's buying.

      Every time a share changes hands there is one buyer and one seller. There are never times where "everyone is getting out of the share market" or when "everyone's buying" because there is the other side of the transaction selling/buying.

      I think what you mean to say is "I normally buy shares when the market sentiment is bearish and sell shares when the market sentiment is bullish". Which is just a speculative trading strategy.

  • Peanut money on 16/03/2015 - 15:48
    -1

    Apolgies and thank you so much for the economic lesson Mr Keynes but all I did was give a figure of speech.

    BTW all trading is speculative.

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