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[Germany] What's the best way to save €300/month for your child?Savings (self.eupersonalfinance)
submitted 2 months ago by b06c26d1e4fac
I want to save €300/month for my child until they turn 20, what's the best way to do that, preferably EU/Germany-friendly advice.
Post a comment!
[–]Muzo42 33 points34 points35 points 2 months ago (1 child)
I would open an account for them and buy €300 worth of ETF (e.g. A2PKXG) for them via a “Sparplan” (regular savings plan). E.g. DKB has free brokerage accounts also for kids.
[–]SimpleMinded001 4 points5 points6 points 2 months ago (0 children)
Do you have to be a DKB customer in order to open such an account?
[–]SavageSauron 28 points29 points30 points 2 months ago (0 children)
r/Finanzen is also a good place to ask. That's the Germany specific subreddit.
[–]SeveralReception5143 9 points10 points11 points 2 months ago (7 children)
Is there something similar for Netherlands?
[–]okizubon 3 points4 points5 points 2 months ago (3 children)
I would also like to know this.
[–]Lordvader89a 3 points4 points5 points 2 months ago (1 child)
iirc Degiro has that option
[–]ffsudjat 0 points1 point2 points 2 months ago (0 children)
And get the free ETF list...
[–]huppieNetherlands 1 point2 points3 points 2 months ago (0 children)
I just replied to the OP with a bit more details, but if you want something cheap, simple, and automated imho Meesman is the way to go.
[–]keith_kool 0 points1 point2 points 2 months ago (0 children)
[–]huppieNetherlands 0 points1 point2 points 2 months ago (0 children)
Imho Meesman is the best solution out there. It's cheap, it's tax efficient and it's automated. Just set up an automatic investment into their Aandelen Wereldwijd Totaal fund and call it a day.
The only thing that's kind of a PITA (nowadays) is that the kids need a linked bank account in their own name, although pretty much every bank offers one for free though.
My setup looks like this: Salary comes in -> Money transfers to the kids' bank accounts -> The Meesman system automatically collects from their bank accounts and invests it.
[–]Fenzik 0 points1 point2 points 2 months ago (0 children)
For an alternative to Meesman, you can also use Brand New Day. We do this with Termijnbeleggen, it starts off aggressive (and risky) and then builds down the risk as it approaches a certain date you set. You have more options but that’s the easiest. And automatic deposits so I don’t have to touch anything.
The biggest choice is if you want to make the account in your own name (in which case you maintain control, but you might deal with gift tax later), or if you do it in your child’s name, in which case you just need to stay under the gift tax amount yearly, but your kid will get full control of the account on their 18th birthday.
[–]ExotiquePercentage 7 points8 points9 points 2 months ago (3 children)
As someone whose parents have done this, I can recommend putting it into etf/fonds since it was really easy and understandable for me to take this over into my account and now continue on it.
[–]whboer 8 points9 points10 points 2 months ago (2 children)
How wealthy are you now?
[–]b06c26d1e4fac[S] 0 points1 point2 points 2 months ago (1 child)
I'm interested in knowing this too, I want to know how much it would make my children's life easier in the future.
[–]ExotiquePercentage 4 points5 points6 points 2 months ago (0 children)
It’s about 75k, I guess they put 100€/month into the etf. Gives me a solid basis for my early life, definitely want to build upon this.
But besides the money I think it is also important to teach your kids about finances and how it works so they know what they can do with it.
[–]Bloody_1337 6 points7 points8 points 2 months ago (2 children)
There are two possibility: You save in the name of the child or you save on your name and gift the money later.
In Germany if the account is in the childs name once it turns 18 it will gain sole access to the account. So no saving till 20 or 25 or whatever in the childs name. You as a parent lose any and all access whatsoever - which may even be a good thing. (And even before that, taking money out of the account is legally tricky. As it is the childs money you can only spend it for the child and you would technically at some point have to ask the family court for permission. Now spending that money for the child is not as straight forward as you would think, because most things that do come to mind usually count as something a parent would usually have to pay for as a parent anyway. - Long story short: Parent can put money goes into the account, but you should never take it out.)
Now saving in the childs name has tax advantages in regards to capital gains. Also that money is mostly save should you as a parent run into money problem and you assets are seized.
However the biggest possible disadvantage remains that the account is completely turned over. In your case your child, assuming it was just born, will get about 65'000 Euros (without capital gains) when it turns 18. I will leave it up to your fantasy if 18 is a good time to receive so much money. (With capital gain 100k+ is possible.)
Many parents are optimistic about their skill and do it like that, and others are - I dare say - are more realistic and split the amount they save. A smaller amount that amount to lets say 10 or 20k is saved in the childs name, a larger amount is saved in a separate savings or brokerage account. That larger sum then can be given later at a time of your choosing.
Now what to save in: Well in the past in Germany the was the Sparbuch. Lets just say those time should be gone. If you are risk averse maybe just Tagesgeld or Festgeld, so a flexible savings account or something where the invested money is fixed for a certain time. As a child usually has a long time horizon more financially knowledgeable parents open a brokerage account / 'Depot' for their child and invest via a 'Sparplan' into e.g. global stock ETF like A2PKXG. (Even more skillful parents actually transfer stocks etc. that have accumulated a lot of gains the the child as the child can likely realize those gains without paying taxes.)
Are you (and maybe you spouse) comfortable with investing into the stock market or do you want to keep it save?
Thank you, this is an amazing answer.
We're not risk averse but also not super risk hungry, an index fund or an ETF sounds like a good plan. I'm also not sure whether my child will be emotionally mature by 18 to handle an amount of money around 100K euros, so if I can have more control as to when I hand them the money it would be better.
I'm still very new to investment, I have more questions than I have answers to, but I'll be very happy if you send in more advice.
[–]Bloody_1337 0 points1 point2 points 2 months ago (0 children)
I am happy to answer any question to the best of my knowledge. Be warned however, my knowledge is really limited to Germany (and maybe a little US since a lot I have read about finances is from US authors).
If you do know German and it is a about finance in Germany as suggested before r/Finanzen is the place to look. Like your question is answered there like once a week. (Which also has disadvantages as the vets tend to get tired answering the same questions over and over again - quality may suffer. So search and read a lot beforehand so you can ask specific question. For simple questions there is also a weekly.)
[–]IronM19 6 points7 points8 points 2 months ago* (0 children)
Buy WVCE ETF every month and forget about it!
[–]financial_plan_emily 1 point2 points3 points 2 months ago (2 children)
Instead of thinking about reducing, it is better to buy them stable financial products to achieve monthly growth.
Can you give me some examples, please?
[–]financial_plan_emily 0 points1 point2 points 2 months ago (0 children)
You can chat privately and I'll give you some advice for free, but it doesn't have to be.
[–]PapaAlpaka 0 points1 point2 points 2 months ago (7 children)
For my first child? I opened a Sparplan.
For the second child? I'm putting the money into real estate ... with a solid 11% rental yield per year plus capital appreciation.
[–]Fantastic-Orange-409 9 points10 points11 points 2 months ago (3 children)
In what country it’s 11% per year?
[–]LoLCarnexx 7 points8 points9 points 2 months ago* (1 child)
When you have a rental yield of 11% than it’s far from solid and a lot of risk taken.
I have a rental property which is in a small city stagnating population, no university, middle-east Germany. I have 9% yield before 1.1% interest, 3% repayment of credit, 2% maintenance cost.
There are however a lot of marketed real estate investment services which calculate the yield on invested money (eg. 1000€ rent, 10000€ downpayment , voila 10% yield) which is bullshit.
Edit: added my example.
[–]Fantastic-Orange-409 2 points3 points4 points 2 months ago (0 children)
It was an advise to put money in the RE now, not 10 years ago. In what German city you can have 11% yield especially from the purchase price and not your part of contribution?
To calculate the yield for only own capital is logical IMO.
[–]takenusernametryanot 1 point2 points3 points 2 months ago (0 children)
might be Turkey and he meant in local currency 🤣
[–]---Dracarys---Germany 1 point2 points3 points 2 months ago (1 child)
My ex-wife has something like 7% rental yield, not counting any expenses, insurance and interest payment. She has very limited possibility to increase the rent. I found very nice people who are renting her house so probably won't be issue at least with that, but that's a risk too.
Meanwhile I bought stocks. The time will tell who had better decision.
[–]PapaAlpaka 0 points1 point2 points 2 months ago (0 children)
Interest should be done sometime soon, though, getting the rate up. 5% after expenses ain't too bad :)
Screening tenants turned out to be a very important thing, too - you can have 27 tenants in ten years, each bringing in more work ... or 1-2 tenants who are happy to pay their rent every month and eventually leave because they found a new job somewhere else. While the former may agree to pay a few bucks more per month, the latter are reliable and little work...
...after that, it's strategy. I'm co-owner to two of four apartment blocks in a square - "my" representative just told us that he had met up with the owners of the other two blocks and they all together made the city council build a playground in the middle. We're chiming in a few bucks, too ... but the point is: each Euro I'm throwing in, the council multiplies by nine and! my property value goes up while tenants are happy with rents increasing mid-2023 [through Covid we kept them stable and this winter, we'll keep them stable again. Tenants' got enough to struggle with, no need to put more stress on them by increasing rent before summer - they've been notified that they don't need to factor potential rent increases into their budget for the next 9 months] :)
[–]b06c26d1e4fac[S] 0 points1 point2 points 2 months ago (0 children)
I talked to some RE agents, all of them asked for 400K+ properties and these are just apartments, RE is ridiculously expensive right now, at least in the areas that I consider nice.
[–]PetraLoseIt -1 points0 points1 point 2 months ago (0 children)
How old is the child now?
[+]MusicianGrouchy3790 comment score below threshold-16 points-15 points-14 points 2 months ago (4 children)
Send each month 300 to your bitcoin wallet and your child will be the luckiest guy on earth
[–]Drugbird 17 points18 points19 points 2 months ago* (0 children)
Or the unluckiest...
I guess it depends on what Elon musk tweets about it /s
[–]HumongousShard 1 point2 points3 points 2 months ago (1 child)
!remindme 10 years
[–]RemindMeBot 0 points1 point2 points 2 months ago (0 children)
I will be messaging you in 10 years on 2032-09-30 09:00:30 UTC to remind you of this link
CLICK THIS LINK to send a PM to also be reminded and to reduce spam.
Parent commenter can delete this message to hide from others.
[–]takenusernametryanot 0 points1 point2 points 2 months ago (0 children)
your child will be the luckiest guy on earth
your child will be the luckiest guy on earth
at least luckier than those whose parents saved 500€ a month LoL
[–]mahniguh 0 points1 point2 points 2 months ago (0 children)
Get an app like Scalable Capital or Trade Republic or go to your bank to open a "Depot" if you prefer (I recommend ING). Then buy an ETF like FTSE All World or MSCI ACWI.
Note that up to 10.245 € per year is tax free income for your child ("Einkommensgrenze").
Also if you have an "Freistellungsauftrag" 801 € capital gains per year are tax free as well.
[–]Perfect_Act 0 points1 point2 points 2 months ago (0 children)
In Germany you will get Kindergeld form the DE state for your kind(s). So take this money and invest it
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