Starting adult life with a financial cushion - many parents would like to make it possible for their children to do so. It's best to start saving for it early. This is something to consider.
ETF savings plans based on a global stock index are particularly suitable for long-term savings by parents for children. This is what the magazine "Finanztest" recommends in its current issue (11/2022). The risk is widely spread here and the deposit is usually cheap, with some banks even free of charge. Most of the 19 banks in the Finanztest study that offer custody accounts for minors do not charge a fee for this.
However, if you invest money regularly, you have to expect purchase fees with ETF savings plans - depending on the provider, these were between 1.20 and 33 euros per year in the test (19 offers from branch and direct banks for a savings rate of 50 euros per month). However, three offers even got along without fees.
It is advisable to look for an accumulating variant of an ETF, which means that the annual return is automatically reinvested. This is how the interest effect is used. ETFs investing worldwide would have been worthwhile in the past: over a period of 18 years, there would have been an average annual savings plan return of 8.5 percent. In the worst case there would have been minus 0.3 percent annually over 18 years, in the best case 14.8 percent.
But if you want to invest for less than ten years and or don't want to take any risk at all, according to "Finanztest" you are also well advised to invest in a fixed-term deposit - interest rates are currently rising - up to 3 percent interest for an investment period of five years are possible here. For 10 years there is up to 3.25 percent (Bausparkasse Mainz). The offers have improved significantly, last year there was a maximum of 1 percent interest for a 10-year term.
Insurance offers or gold savings plans, for example, are not recommended according to "Finanztest". Here, either the returns are too low or the fees are too high.
Before starting a savings plan, parents should think carefully about how much money they want to invest for their offspring and in whose name it should be saved.
If it is in the child's name and the income is not too high, it does not have to be taxed. But: If the savings exceed 15,000 euros, it could become difficult to apply for BAföG later.
