Need for inputs/suggestion: Children Savings

Investing / Others
1

Hi all,

We started to accumulate something for our little boy (2y). Likely the form of investment is not optimal and that’s why I seek for advices.

At the moment, this is what we (with the contribution of the granparents with gifts) secured for him:

  • 10K EUR, now deposited into a Post Finance Young Account (0.25% interests). This amount can be withdrawn at any time and invested somewhere else;
  • 4K EUR, in a form of BTP (italian postal savings bond). At 18y (2039) he will withdraw c.ca 8K EUR. This amount could be withdrawn, but we do prefer to keep it there (diversification plus other reasons).
  • 1 once of gold. This can be traded with the regular daily selling prices.

In a few months, the family will increase by +1, so we have to start to extend the savings.

I would like to continue investing with the metals, with a regular saving and then purchasing the golden bar (e.g. 20 gr.).
The 10K at PF account, is definetely senseless: I was looking for alternative products on Post FInance, but I could not find anything I could really understand, knowing myself I do rather prefer to get an easy and managable way to handle it.
I do have a Degiro where some shares are parked: would you reccomend some ETF to buy on that platform which I can regularly top-in? Or other alternatives?

Thanks in advance for your kind inputs
Best,
Cappuccio

2 Likes
2

Maybe also clarify whether the investments need to be linked to EUR (rather than CHF).

3

not the newest thread, but may be helpful regardless = How to invest for children?

4

Being 2 years old, he won’t need or spend invested amount for the next 14-16 years. Also, since this amount is being gifted to him, he likely won’t (or morally shouldn’t) be concerned about investment performance in the meantime.

As such, I would…
a) either invest everything in a broadly diversified equity ETF (for higher expected returns) OR
b) allocate equal amounts to 2-4 investments (the ETF, postal savings bond, gold and possibly Bitcoin).

The latter can be educational when you explain investment basics (such as compound interest / returns returns) and show him the difference in investment returns upon turning 18 - the age at which these investments will probably be made freely available to him.

1 Like
5

I use the postfinance global fund with monthly investments for my two kids. Fees are higher than with ETFs, but it‘s easily set up and allows for smaller contributions (in my case 200 Swiss francs; their Kindergeld, essentially)

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6

I will recapitulate my thoughts that I was writing in different places here: “saving for children” is a mental accounting bias that is being exploited by financial services industry.

7

Just buy a separate all world ETF on your own account once a month or so.
Then do whatever you want whenever you want with it.
“Savings accounts” will not do much on the long term; especially don’t make sense with the kids’ “risk profile”. :smile:

8

For such a long period I would absolutely recommend to buy a low cost, diversified share ETF. This is one of the central points of the FIRE movement - how to build Financial Independence. " VT" is the usual recommendation (or a similar world ETF that is available in Degiro)

Shares are volatile in the short term but if you buy a diversified, low cost fund like VT, via recurring investment and over a long term, then the risk largely disappears.

Historical real returns from shares over a long period is ~6% pa. Investors and company owners are protected from inflation because companies can increase prices.

On the other hand, savers with their wealth in bank accounts are currently getting crushed by inflation.

Post finance account: losing almost 3% p.a. in real terms after inflation. After 16 years it would lose approx 35-40% of its real value

BTP - interest rate is approx 4% whilst Eurozone inflation rate is 7%. It is also losing ~3% in real terms

If SNB and ECB manage to lower inflation to the target 2% the picture might become less bad for savers. I would not advocate waiting for this to happen

(just my pov - not qualified financial advice , do your own research)