Sure, I meant virtual as virtually assigned to your kids, because in reality it’s yours - you not spending it is just your decision.
@Mirager @Brndete do you mean that you are currently at the risk of accidentally spending the kids portion (i.e. your own is close to 0)? Otherwise I still don’t see the point of separating the assets. Is it just nicer for you to be able to look at a number in a clean UI in a separate account to keep track of how much it’s growing?
In a worst case scenario yes, but that would be an odd way of thinking about it given I’m already covering their costs, so to be in a position of needing to dip into investments (any) would mean I’m struggling to cover their costs in the first place. So would they need to go without, or with less while there’s money in stocks?
For simplicity what I’ve set aside for kids is a slowly growing stack of BRK.B shares. The long-term intent is to transition into income investing for covering my own + wife’s living costs when not working, and leave what’s not needed to grow in broad index funds, for everything to go to the kids. @PhilMongoose has made a good point though, “what’s the point of giving them (by means of dropping off this mortal coil) a large sum/pile of assets when they’re 40+, with set up lives etc?”, the rationale being that they could/would have a lot more need of it earlier than later. I don’t know the answer to that, what I’m sure about is that parents need to enjoy life too - the Greek culture used to be one where each previous generation would starve so the next generation wouldn’t, but I don’t subscribe to that!
Couple of very losely held counterpoints (against managing your kids’ money in a mental sub-compartment of your – the parents’ – portfolio).
There are more detailed aspects to this kind of approach, and I belive I’ve even written about them in this topic.
At any rate, I believe either way – separate account or not – probably works fine. The key is IMO in keeping your kid(s) updated about what you are doing in “their” investment account, why it matters, how it’s working (hopefully) and why it is important to not interrupt the compounding.
$ Just kidding, man. 
But top this LMT pump from when I bought it for him at maybe age 16:
$$ Just 8 to 13 more years of us supporting him now. 
$$$ I know I am jinxing it now. Surely he’ll aproach me tomorrow and ask me to sell it all and transfer the cash to his ZKB account.
I’ll tell him it’s a bank holiday tomorrow and will then work the weekend to convince him not to sell …
No, but I want to have an overview and do my day-dreaming calculations with my own numbers. When I got some coins on behalf of new-borns, I also started their own piggy bank instead of putting it in my purse. Why would I mix it up?
Well, the piggy bank was actually handed over and is starting to have educational value for the oldest. Maybe the accounts will have in some 10 years or more, as well, but I’d rather not involve them too early.
But the learning part is a different topic. To educate a teenager, I’d likely start something new, maybe similar to what Your_Full_Name describes.
beginning of the year i opened 2 viac invest portfolios for my 2 kids (5 & 8 years old) )where i plan to pay in quarterly until they are 20. (in the end i will have paid in around 8k CHF per child)
I want to do a year end review with both of them every year so they learn about “their” investments.
The portfolios are in my name.
I did not yet disclose to the kids when they will get full control over the portfolio.
My first priority is to show them about investing
I think there are a couple of issues with having investment in Kids names:
Personally, I’d like to wait until my kids have worked a few years and demonstrated some financial maturity and discipline before giving them money.
I’ve seen a case what giving young adults too much money too early can do and what bailing them financially can do. It ended up being very bad for them. Worse than had they been given no money at all.
Well, it’ll be a valuable lesson about life not being fair and that it’s better to be lucky than good?
Hello all,
I found myself in a rather nice situation, but have no clue to which bank or broker to go.
My parents are donating to my children of 1.5 an 4 years old 20k€ each from France.
For that matter, our “notaire” is asking 2 accounts in their name to receive the money.
I checked already VIAC invest but it would be in our name, while WIR doesn’t propose children accounts.
We’re considering TrueWealth in order to invest the money in ETF, as they propose named accounts.
Do you have any suggestion where to go from there?
Thanks!
The disadvantage of an account in the child’s name is that the money belongs to them when they turn 18, even if they are not yet ready for it. I can’t imagine anything worse than having to give my child power of attorney over his account at the age of 18 if he is addicted to drugs or has other problems. But that’s a worst-case scenario. On the other hand, I can understand why your parents want that. That way, they can be sure that the money will be used by your children.
Otherwise, TrueWealth makes a solid impression on me.
A way around it is opening the accounts for kids, get power of attorney for yourself, and transfer everything to you after the French leg of the gifting process is concluded. You may want to make sure you can gift your children the amount/stocks taxfree in a few years.
I once safeguarded a substantial stock gift from grandparents for my son until I felt he is mature enough for it (exactly @markus654 rationale). Tax canton ZH didn’t even want to see any gift declaration to child and IB transferred stock from my account to his account based on my verbal declaration without any issues (change of beneficial owner usually triggers money laundering warnings).
I’m pretty sure that this should not be possible without the bank’s negligence? The whole point of having assets in child’s name is indeed the fact that banks and courts should enforce the fact that the parent/guardian spends the money only in the interest of the child and not their own. Allowing to simply transfer funds from child’s account to parent’s one would obviously defeat this purpose as it loses all control over how they are spent.
On top of feasibility sounds highly unethical FWIW. If the grandparents insist on having the money donated to children directly - then it should be like that. But of course it might be worth to just try to convince them to donate the money to OP directly, then it solves a bunch of issues
Agreed. If I remember correctly, it was the “notaire” who advised about the proper way of opening accounts. I assumed that a legal(ese) reason was the basis for this and not ethical considerations.
True Wealth is a good option. Low costs, and solid service. BLKB as custodian bank. Full bank statements. Lots of room to customize the portfolio.
Hello all !
Yes indeed, it was up to us (the grand parents do not care), it would be under IBKR sub accounts.
Anyway, I think TrueWealth is for now the best option as it will be legally under their name, but still possible to invest the monney better than the 0.XX% interests on any bank savings accounts.
Thanks for your help !
Far to be an expert. For my kids, we use Finpension with a long-term investment strategy. Both my wife and myself have an individual accounts: we both have a portfolio we dedicate for kids. Altough my wife currently does not work, the 2 accounts are in parity: whenever I put something, it goes equal into both savings. Same costs to operate, bit more of safe for kids as the accounts are under our names.
Great thread!
As often, I completely overanalyze topics like this and spend countless hours on it.
Having read everything with the eye on setting something up for our upcoming firstborn, I concluded tentatively on the following set up.
Both my wife and I intend to make a sizeable donation to the IBKR account every month (not sure what that amount would be, I’ll just make something up - e.g. 250 CHF by each of us each month). I suspect the childs grandparents will typically make smaller gifts but I could imagine during the first 12 years or so moving any sum in postfinance >500 CHF to the IBKR account to add investments.
Does this make sense by addressing both objectives and mitigating key concerns or is this overengineered?
I never understood why a child’s account had to be completely in their name. I guess it was for people who don’t take responsibility for their finances and would spend the money from that account. I would always keep the accounts in the parent’s name because it’s more flexible. I would also not tell the child about it until they are fully financially educated (between the ages of 18 and 30), but maybe that’s just me.
When it comes to gifting money from relatives, why does it have to be transferred to you in the first place? Why not suggest that they save it themselves in a separate account, which would give them the flexibility to gift the whole account at whatever age they want?
One account in the kids name is (speaking just for me) to teach ownership (budget management) and provide a retail banking service which everybody needs eventually
One account in parents name (focused on investing) is to teach delayed gratification / compounding… lessons also valuable in other parts of life (education, sports, etc.)
My over-analyzing follows very similar patterns, with similar outcomes:
A IBKR account (sub-account of my own) receives a standing order from both of us, and will get converted into VT whenever there is > CHF 600 or so, just to make sure the minimum fees (commissions ~0.5 USD, fx conversion ~2.5 USD) don’t exceed 0.5% or so, could be adjusted.
we found that monthly CHF 200 should convert into something like 70k by the age of 18 which should be a solid base for whatever little nugget would want to do with it. studying, traveling, opening some shop, continue saving,…
I’d say no, it’s more like the expected result for the problem statement at hand
Sleeping over it, I’ve taken a step back and decided to simplify this further:
Until the kid is in his teens and with higher spending ‘needs’, the approach will be to transfer anything above 500 CHF on the retail account to the Finpension investment account. Given the long time horizon (18+ years), I’ll be taking a bit more of an aggressive growth allocation of ETF’s - haven’t concluded on what exactly yet but e.g.
Given he’ll inherit all of my wife and my assets long term anyway (e.g. house, almost entirely paid off by then), he’ll not have any material needs anyway but still we believe it’s good if he has an amount when he’s around 20 to either invest in education or do a world trip or as downpayment for a house. Also, it’ll be good for him to see there the benefit of investing / compounding beyond just consuming. Wish I’d have gotten a bit (read: a lot) more of that education when I was younger instead of having to figure all that out just by myself.
