Best Savings Account for Kids?

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Forums › Finance and wealth management › Best Savings Account for Kids?

seoras

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#277062 24-Sep-2020 10:33

My mother just gave me some money for her 4 grand children and I'm now wondering how best to set it up for them.

My own bank offers a kids account with IPA @ 0.5% which is pathetic and inflation erosive.

I see ANZ wound up the bonus bonds which was something I had considered.

Anyone got recommendations for good kids saver accounts/schemes?

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#2573317 24-Sep-2020 10:38

I’ve set our 10 month old up with a KiwiSaver account through Juno and she also has a Sharesies account we put money into.

I guess it depends what you’re wanting to achieve for them? For us it’s long term stability, the ability to supplement a house deposit down the track, and (if she’s good) a nice little present for her 21st.

timmmay

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#2573318 24-Sep-2020 10:40

A managed fund, if they don't need it for a good while. It's not a bank account obviously, bank accounts give effectively a negative return at the moment, these at least keep up with inflation.

Yakcall

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#2573330 24-Sep-2020 11:04

Yeah I was going to suggest going with Sharesies as well, I use them and find them great, and they have kids accounts. Like putting it into Kiwisaver for them but you can actually still access the money when you want just by selling. https://www.sharesies.nz/ourblog/2018/8/12/kidsaccounts

hsvhel

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#2573377 24-Sep-2020 11:10

Both of mine are in juno

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littlehead

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#2573386 24-Sep-2020 11:36

Money Hub has some good articles on different savings products for kids. One on Bank Accounts, Investing for kids in general, and Kiwisaver.

If it was me I would look at either Sharesies kids accounts or a low/free fees Kiwisaver. Housing is looking likely to be even more difficult in future so locking it away in a Kiwisaver and withdrawing for a first home deposit seems sensible to me. You are fully enrolling your kids in Kiwisaver though. They will always have to contribute unless they go on a savings holiday. No Government contributions until they turn 18 as well.

Handsomedan

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#2573400 24-Sep-2020 11:43

Our kids have had ASB accounts since they were in Kindergarten.

They simply converted them to current accounts when they got old enough to have EFTPOS cards and access to their unearned money.

Interest is going to be effectively nil for the foreseeable future...Thankfully a bank account is unlikely to go negative if its simply a normal savings account as opposed to a TD or investment account.

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seoras

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#2573452 24-Sep-2020 12:18

Handsomedan:

Our kids have had ASB accounts since they were in Kindergarten.

They simply converted them to current accounts when they got old enough to have EFTPOS cards and access to their unearned money.

Interest is going to be effectively nil for the foreseeable future...Thankfully a bank account is unlikely to go negative if its simply a normal savings account as opposed to a TD or investment account.

Yeah that's my concern with investments and managed funds. You are locked into them and they take/make an annual fee (typically 1%) regardless of how well/badly the fund does.

The global economic situation is looking dire and I'm leaning towards a bank account for the short term to be able to wait and see.

@littleheads link to moneyhub's article on kid's accounts shows the Co-Op Bank as offering 2% pa which, in the current economic climate, is pretty good.

There's been some great suggestions in this thread I've started, really pleased and grateful for the advice given! Thanks guys!

pistol

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#2573459 24-Sep-2020 12:33

Yakcall:

Yeah I was going to suggest going with Sharesies as well, I use them and find them great, and they have kids accounts. Like putting it into Kiwisaver for them but you can actually still access the money when you want just by selling. https://www.sharesies.nz/ourblog/2018/8/12/kidsaccounts

While good advise remember if you choose to pull it out to spend it still needs to go towards the kids or it can be considered tax avoidance.

freitasm

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#2573464 24-Sep-2020 12:53

We have a savings account for our daughter - cashback from my credit card automatically goes into that account - so it grows but not really because of the interest.

We have also created a Sharesies account (aff link) and I put something there every month. Kids' accounts are created under your own. You will need their IRD number to setup with lower tax and you can set at what age they can takeover the account.

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duckDecoy

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#2573467 24-Sep-2020 12:58

seoras:

Anyone got recommendations for good kids saver accounts/schemes?

Check out co-operative bank. For kids no fees and 2% interest rate. It is capped at $4k though.

duckDecoy

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#2573481 24-Sep-2020 13:04

I see quite a few people are recommending Sharsies. If you are considering investing in some NZ ETF/PIE funds then it might be cheaper to go directly to some of these funds. You would be paying the fees anyway plus paying Sharsies on top of that.

Smart Shares doesn't let kids invest directly in their name. But SuperLife do, and they let you buy the Smart Share funds so you can get into them that way. You can drip feed money in too, minimum of $50 per month from memory.

At the time we started investing for my son they had a fee discount for children too, I imagine that is still the case.

https://www.superlife.co.nz/invest-for-children

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EcosseTech

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#2573482 24-Sep-2020 13:06

Maybe speak to ANZ, When I was younger my Grandparents opened National Bank accounts for all the grandchildren.
The term Grand Lodge rings a bell but if you google that you find a whole lot of stuff about freemasons.. Interest wasn't massive but it wasn't zero!
One of my family members buys silver bullion and holds it physically at their house for the kids.

pistol

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#2573485 24-Sep-2020 13:12

Some other alternatives to Sharesies I would recommend looking into are Simplicity and InvestNow.

Simplicity has no membership for kids accounts
https://simplicity.kiwi

InvestNow has no membership fees (for anyone)
https://investnow.co.nz/childrens-accounts/

You can review the fees Sharesies charges for kids accounts here:
https://www.sharesies.nz/kids-accounts-terms-conditions

kotuku4

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#2574237 25-Sep-2020 13:49

Plus one for Simplicity kiwi saver or investment funds. We use investment funds, as you can withdraw as required.

SheriffNZ

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#2574243 25-Sep-2020 13:55

Here's an alternative option recently discussed on a good local podcast I listen to - https://www.bbc.com/news/uk-england-somerset-54040307

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