Which savings products should I buy for my child?
Savings products are a simple and effective way to put money aside for your child for future projects, give them a hand in life and help them leave the nest 😉. Financing their higher education, driver's license or buying their first home requires planning ahead and having some savings tucked away. So which savings products should you subscribe to for your child? Birdee takes stock with you.
WHY SAVE FOR YOUR CHILD?
Birthdays, anniversaries and Christmas parties are all occasions when your child is likely to receive money... which often ends up sleeping at the bottom of a nice piggy bank. Putting money aside for your child allows you to :
- build up a small amount of savings for your child that will be useful to help them get started in life,
- anticipate big expenses: education, driver's license, first real estate purchase, etc,
- prevent his money from losing its value,
- teach them the basics of managing money on a daily basis.
The good news is that there is no minimum age to start saving for your child. In fact, the earlier you start, the more time you'll have to save money and make it grow.
Saving for your child should be considered a long-term investment, as it can take several years to earn your child's first returns.
Documents to be provided to subscribe to a savings product for your child
Whether you choose a traditional or online bank, the steps are the same. To open a bank account or a savings account, you need
WHICH SAVINGS PRODUCTS TO CHOOSE FOR YOUR CHILD?
Invest your money in a bank savings account
A bankbook is an easy way to invest your child's savings. Bank passbooks generally offer moderate interest rates, but are low risk and easily accessible. Often guaranteed by the State up to a certain amount, bank savings books are very secure financial products.
As soon as your child is born, parents can open a bank savings account in their child's name and deposit money into it regularly. The capital thus built up over the years can be used at any time when the child grows up.
💡 Bank savings books, such as the Livret A or Livret Jeune in France, benefit from a regulated interest rate, guaranteeing a stable and predictable return.
Open a Plan Epargne Logement (PEL) for your child
Opening a Plan Epargne Logement (PEL) for your child can be a good idea to teach your child to save money and develop good financial habits. The PEL can be used to finance a future real estate project, such as buying their first house or apartment. By having their own PEL, children understand the importance of saving to achieve long-term financial goals.
The PEL offers interesting tax advantages and its interest rate is fixed when it is opened and remains valid for the duration of the contract, which can be up to 15 years. The interests generated by the PEL are exempt from income tax until the twelfth year following its opening. This is also an argument in your favor with banks when you need to borrow!
Opting for life insurance
Life insurance allows you to grow your savings over the long term thanks to its advantageous tax treatment. It is a flexible savings product that offers many investment options for both children and adults. Depending on the age of the child, his or her consent may be required at the time the contract is opened. The management of the life insurance policy remains with the parents until the child reaches the age of majority. Parents can thus adapt their investment strategy according to their risk profile and objectives.
Life insurance can also provide some financial security for the child in the event of the parents' death. Parents can open a life insurance policy in their name and pass on the capital to their children and ensure their financial future in case of death.
Our advice: consult a financial advisor in order to choose the life insurance policy best suited to your family's needs and benefit from personalized support.
Thinking about your children's future with a PER
Just because your child is still a minor doesn't mean you can't already think about his or her future. The Plan Epargne Retraite (PER) is a savings product increasingly favored by parents. The PER can be opened directly in the child's name and fed by one-off or monthly payments.
Investing in the stock market
Another option for investing your children's money is to invest in the stock market. If you are willing to take a higher risk for your investment, you can consider investing in stocks and bonds with, for example, a CTO (regular securities account), or invest in real estate with an SCPI.
Is your child over 18? Why not suggest that he or she subscribe to a Stock Savings Plan (PEA)? The PEA is ideal for investing your child's money and teaching them financial skills from the age of 18.
Our advice: before investing your child's money in the stock market, it is better to have some basic knowledge of financial investments or to be accompanied by a professional.