I have two small kids and was looking for a way to put money for them. Either recurring every month and/or when grandparents sends money from time to time.
What do you guys do?
Ideally something free, and that is a no-brainer to transfer money in case we move overseas. (We are permanent residents, not AU citizen)
Thanks for the tips.
NAB? Who knows what the state of banking in Australia will be by the time they are 18.
Yeah we don't know, but at least they'll have some money and 18 years of composed interest. (Although not planning on giving them at 18yo, too young too easy to burn the money lol. I think 25-30yo is a good age to receive a sum of money)
For me, any age is a good age to receive sum money 😎
your home loan offset account if you have one.
This is what we’ve done for our kids
Each have an account linked to our offset.
I forget to mention, we are not planning on buying a house. (We're expats and moving country to county every couple of years).
There are plenty of kids savings accounts for free from banks. The big issue that I've found is they get taxed at a high rate once you start earning decent interest. Probably best to stick into an offset loan if you have one.
they get taxed at a high rate
More than $500 a year
As others have mentioned, it's just not worth having any sizeable amounts held in kids' names as they get taxed to the eyeballs after earning ~$400 a year in interest.
You're better off either just setting up a couple of accounts in your own name that are quarantined for them or, assuming you have the discipline, plonk it in your mortgage offset and keep records of it over time. Hand them a nice payout when they reach the relevant age.
Thanks, that make sense. I did not know they were taxed to the eyeball, that sucks.
At this point wondering if I open them a crypto account. Most likely have a better return in 20 years. (with a small possibility it goes to 0 of course)
As others have mentioned, it's just not worth having any sizeable amounts held in kids' names as they get taxed to the eyeballs after earning ~$400 a year in interest.
Yes and no. For cash no (low interest and no capital appreciation), nobody ever made big money having cash on deposit.
Shares. Yes. I am using it as a demonstration for the kid. I put in a regular amount monthly ($100) on the same day into the index (started when they are 1yo). The index pays 2.8% so probably be closer to $20k before get higher tax (which would take a while). When they are 14 - 16 and get their first part time job I'll show them the results.
What kind of account do you open for shares? What kind of share? Stock, super? index? You open an account on their names?
Thanks
I just put it in VGS (vanguard global index, average as you can get).
You can open an account in their name try CMC markets, comsec (use the pocket app for cheap index investing), superhero (people are going to hate me for mentioning them because they are not CHESS, but just transfer out later).
@netjock: do you get killed on brokerage? or is it free under x$? for example a $100 deposit into VDHG monthly
@GenghisGun: CMC is free if you buy less than $1k a day. Once you have $500 first purchase (ASX minimum parcel, you can buy $100 at a time)
Stake is free for ETFs, $100 minimum purchase. If the ETF is $60 per share and you plug in $100 it will buy you 1 share. No minimum parcel.
So you can either start with $500+ on CMC then buy small parcels or start from $0 at Stake.
Comsec pocket is $2 per trade up to $2k. It isn't too bad on even a $100 trade when the index yield like 2%.
taxed to the eyeballs after earning ~$400 a year in interest
With current interest rates, how much is in your kids accounts? They are richer than me…
1) Put it under your name as your kids will get taxed at the highest tax rate
2) Ideally put the money into an index fund (like VAS) using a low cost stockbroker such as Superhero (which charges $0 for buying and $5 for selling)
3) If you really want to put it in a bank, maybe use a HSBC account as they are operating in many different countries.
Dollarmites? :)
Check out investment bonds. Costs a bit to set up but you pay no income tax or capital gains tax
OMG I missed that one
Got some Bitcoin for my kids in 2019. Not for the weak hearted. How much it's worth in 15 years is anyone's guess.
That's good!
Either way, as you shoudl't have invested more than what you can afford to loose, I'd day in 15 years it will be a winner anyway.
I know nothing about these, but is a trust fund an option?
saving under a child name is very tax inefficient
put it in your mortgage offset account paid him/her 4.5% interest a year or whatever you paying for your mortgage and keep tab of it
start invest in their name when they turn 18 years if that what you want
I don't have any mortage, no planning on buying a house, probably leaving in a few years
cash is probably your best option if you plan to skipped the country in a few years
else you have to end up declare foreign income in another country and all sort of tax hassle for little gains
Great southern bank
Youth eSaver Account
An online savings account for newborns to 17‑year‑olds.
Interest rate up to 3.75% p.a.
GSB is good to a point, you only get basic near nil interest when they hit 5Kk
Tab account.
Vanguard accounts and buy them a copy of the new Barefoot Investor book for children.
Looks a bit more complex for expats. They don't want you anymore as soon as you change country
Westpac allows children to sign up for an account that linked to the parents account (for viewing only) and they get access to it when they hit 16/18.