How to invest for children?

Hello,
I am thinking about opening a bank account for my 2 years old girl, her piggy bank is full, also her grandparents would like to send some cash from time to time.

Does anybody know of a good option? Otherwise, what I’d like to do is investing this money in a VT-like fund but my broker (IB) has relatively high inactivity fees and (afaik) no real multi-user option to split investments.

The main problem is keeping the funds separate for each child. This can be solved in many ways.

You can

  • buy a fund similar to VT at your existing broker and keep it apart for her eg VWRL
  • open an account at another, preferably free broker account like DeGiro and do the same (I have referral codes if you PM me). Use VWRL which is free to buy
  • Open an Avadis fund plan per child, which has already been mentioned here in the forum. Their funds and higher fees but are less volatile. And you get a tax statement. Very easy

Related post: Alternative to VT

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Maybe something useful in here?

https://forum.mustachianpost.com/t/how-to-invest-for-my-children

…or here

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Relevant video (German) from last weekend :slight_smile:

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thanks guys, I’ll have a look.
I also need to check the other posts, missed them.

HI Mobius,

how is the feedback there?
Do you have extra fees for your kids?

There were no extra fees after opening the accounts, but at the same time, I have enough balance at the moment to cover for the 100K USD per account opened.

@mobius would you mind to explain with simple steps the process you have followed to open the linked account(s) ?
Can you access those through the web app as well or only through the desktop software ?
How much did you put on the accounts as a starting point and how much/how often are you funding ?

Any recommendation (which cover accident and illness)?

It was simple, from the IB Client Portal main page I went to:

  1. On the user icon, Manage Account
    1.On the vertical action list on the right, selected “Create, Link or Partition an Account”/“Configure” (gear icon)
  2. Selected “Create a New Individual, Joint or IRA Account that will be Linked to My Existing Account Under a Single Username and Password”

Then just follow the steps. The first account I created took a long time, it turned out that their services missed it. As soon as I mentioned it to them they completed the process.

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Just received bad news about my plan to invest for my kids using linked accounts in IB:

We are sending this notice as a reminder that your account U000000 will soon be subject to a monthly activity fee that is intended to offset the costs of maintaining inactive accounts. The fee of USD 10 per month, or USD 20 if your account balance is below USD 2,000, is waived during your first three months following the funding of your account to allow you time to familiarize yourself with our platform.

Please note that the fee is offset by any commissions you generate during the month. In addition, the fee may be reduced if your account balance is in excess of USD 100,000 or you are age 25 or younger.

I’ve sent a message back to them and will keep you posted. I’d like to about having to go through the process of creating a full account for each of them, but in the end it might be the best (less worries about transfers when they’re over legal age).

@Mobius did they not allow you to apply the total funds/number of accounts? I am years away of this but would be interested for future reference. They also mention less than 25…does this mean the fees are waived until and/or 100k chf? The 25 years will arrive before the 100k for sure for my kids…:wink:

That’s what I’m trying to clear up with them now, but doesn’t look like it. I might need to open an IBKR Lite account for each of them.

but can you do that ? As I understand it IB Lite accounts are available directly only to US customers or through an intermediary

Oh, I wasn’t aware of that. Then I guess I’ll have to rely on the waiver until 25 years old.

I’m also interested in the topic, a simple yearly investment in VT for example. I could track it as part of my own investments but it’s not the same. Because if at some point they want to contribute their own savings (if they have a side job or something), it would be fun and educational if they can track it themselves.

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OK, I got an answer from IB. Basically they just repeated what is stated in their FAQs (IBKR Lite is not available for non-US residents, and funds in a main account don’t count towards minimums in sub-accounts, which to me is just plain stupid). Guess I’ll need to find another way to invest my kids’ funds.

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Damn. Too bad! Thanks for the reply though! I’m still planning on trying at PF …not too optimistic but cant hurt to try.

I opened early this year a Degiro account where I pay 300.- per year in order to buy some VWRL shares. I plan to pass this account on somehow to my niece on her 18th birthday afterward.

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It is not as interesting as I though, but it is still interesting. The account would cost 3.-/month, so only 36.-/year until your kid is 25 unless the amount on the account is more than 100k.