Fixed-term deposits for children. How and at which bank invest money for children? Current comparison.
by Uwe Winkler updated on: 07.01.2020
Fixed-term deposit guide for children
What needs to be considered with the fixed deposit for children? You invest the available money for a defined term at the current interest rate at a bank that offers child fixed-term deposits. Access during the term is not possible or only with a drop in interest rates. For this reason, a time deposit investment needs to be considered carefully. As usual with the fixed deposit account, the investment amount must be available when opening the fixed deposit account for children and can be Not, as with a savings plan, top up monthly or irregularly. With terms of up to ten years, consumers can open a Fixed-term deposit accounts for children Make long-term provisions and achieve good interest gains.
The overnight deposit account of the respective bank is to be used as a clearing account for the youth fixed deposit. The savings amount is to be transferred from this to the time deposit account. After the end of the term, the principal and interest will be repaid. It is often possible to reinvest. The prolongation should be considered carefully. The amount of the follow-up interest should speak for a renewed time deposit.
How is the ownership of the account for fixed deposits for children regulated??
Parents can open a fixed-term deposit account in their name and save money for financial help for the children. The later one Training, a degree, a driver’s license or the first apartment are the most common uses. In the sense of the safe deposit, it is better to keep the time deposit directly in the child’s name to let write. A family situation can change and the fixed-term deposit, regardless of what happens, should always benefit the child. The parents authorize each other and to be able to manage the account via online banking. Children are not allowed to do this until they reach the age of majority.
Our fixed deposit comparison only includes accounts in which ownership is possible directly on the minor child under the authority of the parents.
How to save taxes with a separate child exemption order.
Even for kids, interest income can be up to 801 euros / year with own exemption order be exempt from withholding tax. The saver tax exemption applies to income tax. For this reason, it is very important that the ownership is in the name of the next generation. The exemption order is to be submitted by the legal representatives (parents, guardians), under whose authority the account movements take place. More on the subject of extra leave for children
How does the legitimation work with the fixed-term deposit account for children??
For young people who are not legally competent, the legal guardians have to underestimate the application effort. The banks want to make sure that all custody officers agree to open the time deposit account. Often, a call money account must first be opened as a reference account and made more legitimate. The savings amount is then transferred to the time deposit account via this.
What needs to be considered with joint custody?
Both parents must carry out the Postident procedure and identify themselves with ID cards or passports. If the adolescents are already 16 or 17, a Postident with their own ID is also required for them. Exception: One of the participants is already a customer of the respective bank. The legitimation can be omitted for this.
Some online banks require a certified copy of the birth certificate. The certification can be done in schools or at the registration office. It is also possible to send in the original certificate – but not recommended.
What is to be observed with sole custody?
In the case of sole custody, this must also be proven to the bank. Then only a signature on the opening application is sufficient and only one person has to legitimize himself. Evidence is provided with a negative certificate or the custody decision.
Married with different surnames.
Married couples with different surnames should include a copy of the marriage certificate with the application documents for the account.
Calculation example savings plan in 2 stages | ||||
---|---|---|---|---|
Step 1 | savings rate | capital | capital +yield |
|
Daily allowance 1.5% | 1 year | € 1,200 | € 1,200 | € 1,218 |
Daily allowance 1.5% | 2 years | € 1,200 | € 2,414 | € 2,442 |
Daily allowance 1.5% | 3rd year | € 1,200 | € 3,642 | € 3,683 |
Level 2 | ||||
Fixed deposit 3 years 2.5% | 4th – 6th year | € 3,683 | ||
Daily allowance 1.5% | 4th year | € 1,200 | € 1,200 | € 1,218 |
Daily allowance 1.5% | 5th year | € 1,200 | € 2,414 | € 2,442 |
Daily allowance 1.5% | 6th year | € 1,200 | € 3,642 | € 3,683 |
after 6 years | ||||
Payment of time deposits | € 3,926 | |||
Level 2 overnight money | € 3,683 | |||
final capital | € 7,610 | |||
seed money | € 7,200 | |||
yield | € 410 |
Savings plan – combine time deposit and call money
Since saving for children or even babies is a long-term investment, is a 2-Step Plan recommendable.
Step 1: First save on a call money account. Depending on your financial means, this can be done in monthly installments. The aim is to get the minimum investment amount for a time deposit account. In the example we start from € 100 monthly savings rate out.
Level 2: Reach the Minimum investment amount for the children’s fixed deposit, can now be invested even more profitably.
At the same time, you can continue to save on the overnight deposit account and repeat this process depending on the duration of your investment horizon.
If you are pursuing a specific savings goal, you can e.g. complete the first fixed-term deposit with a long term and the second with a shorter term. This results in a payment year in which the entire savings amount is incurred.
Conclusion: With this strategy, you are flexible and can make adequate provisions. The money in the call money account is always available to you for special expenses relating to the child. In our example, at the currently very low interest rate level, 410 euros achieve.
End of term – what’s next??
Caution! You should start thinking about this when you start investing. With some providers, the time deposit account has a period of e.g. To cancel 14 days before expiry. If this does not happen, a reinvestment or prolongation takes place at current conditions. It is best to cancel your account earlier! You are then flexible and the money is really available to the child at the end of the term. After the expiry, it is advisable to first park the money received, including the return, in a call money account. Depending on the market situation and interest rate situation, a new decision has to be made.
Up to 8% return and € 500 bonus for ETF savings plans for children?
The state as a legislator explicitly protects children’s savings investments by prescribing coin-safe savings investments. Share and fund savings plans are not excluded. We recommend spreading the risk with an ETF savings plan for children and not investing in individual stocks. Do you know OSKAR? OSKAR is the ETF savings plan for children, recommended by the magazine ELTERN. Read our detailed test.
A deposit of up to EUR 500 is possible for deposits made until January 31, 2020!!
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