Setting up fund for child

Hi,
I'm looking at starting up a fund for our baby, starting small with just an initial deposit of $3000 and most likely monthly instalments of $100-200/month.

I've been a bit time poor lately to see the best option in terms of return and tax effectiveness, but from what I've seen so far;

Trust - running costs too high for too little money invested.

Education savings plan - no idea where or how to set this up?

Insurance bond - Seems quite tax effective as a long term plan. (taxed within the fund at 30%). We can put it in her name and she can take ownership, add her own little savings and see it grow. learn the magic of compounding The running costs and overall returns may not be as high as an index fund?

An index fund in my partners name - This may be more tax effective as her marginal tax rate may be low for a long time.. I suppose this could be converted into an insurance bond once my partner returns to full time work..

What have others done?

 

Debt recycle and then consider loaning the children money in the future.

 

Would prefer some type of fund she can take ownership and add to if possible.. to learn to save and the effects of compounding..

 

Vb we buy gold and silver coins for our children.
Just a different option.

 

Keep in mind children can only earn $416 per year before they are taxed at 66% (on unearned income).

 

Interesting.. What platform do you buy this on? Who's name do you set this up in?

 

Offset Account.
Excel to track what "belongs" to them.

 

We buy physical coins so no particular name. Not really a lot of thought goes into it VB, were not that diligent. They have their names on it so know who's is who's. Right now they are using their own pocket money to buy some themselves.

A silver coin is around $30 so it's an easy investment for kids.

 

Where do you buy the gold and silver from?

 

You could try an investment bond. I setup a lifeplan one for my son, Half Vanguard Aus Equities, half Vanguard Globnal equities. THey are interesting products (Google search and you'll find more details). Easy set & forget investment.

 

Bankwest and Suncorp among others allow you to setup multiple offset accounts linked to a single loan. In the case of "Bankwest" up to 9 offset accounts.

Each account can have nicknames of your choosing.

Then just setup periodic transfers of a set amount into the relevant offset.

 

This sounds exactly what I'm looking for.. An investment bond based on an Australian or mixed Overseas index fund. It looks like their management costs is still about 0.2%? Do you know if there are other fees that may erode small regular deposits? Will give Vanguard a call.. Thanks

 

Seems nice and easy.. I got mixed messages at CBA regarding this (I wasn't convinced multiple accounts would offset the one loan). Would you quantify the interest you 'save' and add this back to your child's fund at any point?

 

I guess you could ( I don't have kids ). It would be nice if you could automate it. Could otherwise make a periodic manual adjustment.

Edit - you could even be more generous in the adjustment. Mortgage rates are low.

 

We have got ING Savings Maximiser accounts for our two boys (youngest to begin hers next month)...pathetic Bank interest rates (but better than the Big 4 rates), but as you say; they can own it, see it grow and enjoy the ride.

Maybe not the best ROI, but a good instructional tool for them.

The accounts have an automatic monthly savings plan from our account to the online account, and we deduct some of the funds from their pocket money each week - they never get to see it in their hand - designed to give them the idea of "pay yourself first"...10% is the number.

They can only use it for investment when they turn 18; and they know this in advance.

 

After calling them up and searching through their website I can't seem to find an investment bond product based on equities.. only fixed interest. Would you happen to know the product code of the bond you have? Many thanks

 

I read in another thread insurance bonds need to be applied through a financial planner

 

These are financial products so the only people that can advise on them are those with financial services licence which would include financial planners. But you could still set one up by going with the supplier direct.