Investing For The Kids

We are thinking about opening accounts with Meesman for each of our kids once the little man is born. Meesman has announced to finally get rid of the annual €25 euro fee per account. That’s great news for our purpose! They decided to change TER as well. This meant a decrease for emerging markets (0.65% -> 0.5%) and world-wide bonds (0.6% -> 0.5%). However, it also meant an increase for Euro bonds (0.3% -> 0.5%). The latter I can’t grasp and thus we won’t invest in Euro bonds. Such a pity, since TERs usually aren’t that high for Euro bonds when investing in mutual funds.

Anyway, we plan to start with €100 a month for each kid. Probably 80% world-wide and 20% emerging markets or 100% world-wide to keep things simple. The idea is to show them the wonderful world of index investing when they’re ready for it. In the meantime, they won’t know they own all this money because they won’t have access to this account. They’ll have their savings account which they’ll be able to access when they’re ready.

What do you think?

Love,

Mrs EconoWiser

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16 thoughts on “Investing For The Kids

  1. a Mustachian

    It’s mindboggling how much more money I would have had if all my childhood cash gifts had been put into an equity index fund rather than a savings account. I think you’re wise to consider opening investment accounts for your children. I’ve been thinking about doing the same when the time comes.

    Gifts of actual coins and paper money still have value as a teaching tool. Physical money can be hard enough for children to understand, let alone electronic money. I remember my sister at a very young age felt richer with nine 1-guilder coins than with one 10-guilder note. I’m sure she would have felt destitute if she only had a 1 with three zeroes behind it on a computer screen to look at!

    But as investments go it is very hard to argue with eighteen years of compound interest at low cost. I think parents generally are too conservative with their children’s money, putting it into savings accounts where the money hardly keeps up with inflation, if at all.

    And yes, 100% stocks is a no-brainer at age 0.

    Reply
    1. econowiser Post author

      Yeah, thinking about it like that we’d be well on our way to FI!

      We’re also thinking about putting their “windfalls” into stocks as well. I think we can expect generous grandparents to hand out €2000 a year tax free to their grandchildren. Mind you, we’re not hoping or asking them for this…I guess it’s just what some grandparents want to do with their cash…

      Reply
    2. leo

      mooi plan! Wat ik me afvraag: is het eigenlijk zo dat bij periodiek (maandelijks) beleggen grotere (ook neerwaartse) koersfluctuaties uiteindelijk tot een hoger rendement leiden? Is bij jou bekend of hier ooit onderzoek naar is gedaan? Emerging markets fluctueren bijv. meer dan wereldwijd volgens mij.

      Reply
  2. Astrid

    I applaud the idea.

    I’m considering doing something for my niece and nephews. I’d prefer they don’t know about it, until they are going to receive the money (18? 25?). But I’m not sure on how to set this all up. Especially since they live in another country. Ponder ponder.

    Reply
      1. econowiser Post author

        We already have accounts in our names. We want the accounts to be in the kids’ names so that we can already grant them money without paying taxes. In case both of us die, they’ll have to pay inheritance taxes…which is what we want to diminish….

      1. Anonymous

        If you open the accounts in the kids names, you should realize that once they are 18 they can do with it whatever they want (which might not be what you had intended……). Only putting the accounts in the children’s names to save some possible inheritance tax is in my opinion not a good idea. Personally, I think it is not very wise to make any (financial) decision based solely on the tax consequences.

  3. ano

    Als je er geen moeite mee hebt dat je kind op zijn 18de zelf beslist over wat ie met het geld doet, kun je gerust op naam van je kind sparen. Heb je er moeite mee dat het geld gebruikt wordt voor ….. (vul maar in waar jij niet wilt dat je met zorg gespaarde euro’s aan uit worden gegeven), dan kun je beter op je eigen naam sparen.

    Reply
    1. econowiser Post author

      Idd, dat is iets waar we nog over na moeten denken. Eind maart is nummertje twee er en, als we inderdaad willen gaan beleggen op naam van de kinderen, daarna openen we rekeningen. Dan gaat het gelijk op.

      Reply
  4. a Mustachian

    If you Dutch readers are concerned about your children frittering away the money you give them, you could look into a ‘herroepelijke schenking onder bewind’. Just type it into Google and you’ll find many results explaining the concept.

    Reply
  5. Mike

    Hi first time commenter here, I found your blog via Jim Collins Stock series, I am enjoying both the financial and personal side of your blog. I am an American living and working in The Netherlands my wife is Dutch and we have an almost 2 year old son with number two baby expected around Christmas. This is a lazy question but could you briefly sum up how opening an index fund account in your children’s name will reduce your tax burden?

    Reply

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