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Kids savings account

Discussion in 'Living Room' started by hillsguy, 23rd Feb, 2016.

  1. hillsguy

    hillsguy Well-Known Member

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    Hi all, I have 2 little ones and spinning my wheels on where to get best deal for their savings account. So many restrictions on how much they can deposit before they get hit with 66% tax rate and so many options.

    If anyone is keen to share their approach it would be wonderful ... :)
     
  2. Simon Hampel

    Simon Hampel Founder Staff Member

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    We struggled with the same questions - eventually (and based on the advice we received) we gave up trying to find something we could put in their names and just decided to use UBank USaver accounts (in our names) for them.

    You can create as many accounts as you want online and give them meaningful names so you can differentiate between who "owns" which account - it's quite easy and the interest rates are reasonable.
     
  3. neK

    neK Well-Known Member

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    Mine goes into the offset account.
    All transactions are recorded in an Excel Spreadsheet with simulated interest.
    Regardless, they are going to get more than what's saved in the account anyway when it comes time.

    I don't see the point of a separate savings account where I have to pay tax on earnings when it can go into a home loan instead.
     
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  4. larrylarry

    larrylarry Well-Known Member

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    I've thought about that too. I'll help them with deposit in IPs when they turn 18.
     
  5. radson

    radson Well-Known Member

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    Have you looked at insurance bonds?

    From Choice

    PROS
    • Can be set up in your or your child's name. Some insurance bonds allow you to nominate an age when the ownership will transfer to the child.
    • Tax advantages: if you hold the investment for ten years and contribute no more than 125% of last year's contribution each year you won't be taxed for the earnings. Earnings will get taxed within the insurance bond at the company tax rate of 30%. If the funds are accessed in the first eight years then all earnings are assessable. If accessed in years eight to nine then two thirds (2/3) of the earnings are assessed and if accessed in the ninth year but before the tenth then one third (1/3) is assessed. So, if you are on a lower marginal tax rate than 30% you will receive a credit. If you are on a higher marginal tax rate you will need to pay additional tax if you access the earnings before ten years.
    CONS
    • Entry, management and other fees may apply.
     
  6. Blueskies

    Blueskies Well-Known Member

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    Depending on your lender and the number of loans you have, perhaps you could set up a couple off dedicated offset accounts for them (in your name)...? Manually calculate the interest the have earned (saved you) periodically.
     
  7. JacM

    JacM VIC Buyer's Agent Business Member

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    Financially it's going to be better to put it in the offset account. This helps smash your debt down faster and increases chances you can have real family wealth rather than a couple of dollars earning next to nothing in a savings account.
     
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  8. hillsguy

    hillsguy Well-Known Member

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    Thanks everyone for the replies ... PPOR paid off :) so no offset but this is a great idea.
     
  9. Chilliblue

    Chilliblue Well-Known Member

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    Did the same and when it gets to a decent amount, it gets lumped into one of the EFT accounts we have again under our names.
     
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