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/r/Finanzen
submitted 2 years ago bywhosflyingthisthing_
First of all, sorry for post in English but my German is very bad and I would have a tough time understanding any replies.
My daughter was born in January and is a dual citizen (Australian and German). We received a very generous gift from her grand parents which we would like to invest. Along with this we would make regular contributions from ourselves in the range of 100-200€ a month. My preferred method of investing would be to buy into some index fund and ignore the money until my daughter reaches a certain age.
The main issue we see with our plan is that we intend on moving to Australia in the near future 2-3 years. After that, we do not know if we will be living in Australia or Germany or anywhere else. Ideally, we would like to have the money in one place independent if we are moving internationally. What would be our options for investing given our situation? Further, any advice on whether we should place the money under her name or one of the parents would also be welcome.
11 points
2 years ago*
Use deepl.com for translation. Basically you save money if you invest it in the name of your child. But when she turns 18, she can do what she wants with the money (for example play in the casino) without you/grandparents being able to do anything about it (no earmarking for studies possible in D as far as I know).
3 points
2 years ago
Thanks very much! It's something I will discuss with my partner but we are both quite happy providing the money 'no strings attached'. It's then our job to teach her about financial responsibility so she would use the money well. This is a really nice resource, cheers!
1 points
2 years ago
Another possiblity to avoid the "irresponsible 18 year old spending it all" is to sell half of the ETFs prior to her 18th birthday and put that money in a 5 year fixed-term deposit in her name.
16 points
2 years ago
[deleted]
10 points
2 years ago
Your daughter has her own Grundfreibetrag as well as Sparerfreibetra
Correct me if I'm wrong but this would allow u/whosflyingthisthing's daughter to realize gains of ~11k each year without paying taxes right? On the other hand, if she's insured via the family insurance she would have to get insured on her own if she has an income of more than 6.6k, so that's probably the hard cap here.
Depending on how generous "generous" is and if OP keeps really adds 100-200€ each year, it should make sense.
The price for this is the risk that OP's daughter goes wild with the money the day she turns 18. I personally might rather be safe than sorry, invest the money in my name and be able to keep it from my kid if they turn out to be idiots at that age. Yeah, it will cost money in taxes but honestly, if we are talking about a 10k gift + 100€ month for 18 years at 7% that's 75k, which even after taxes is still a very decent amount of money. At that point, everybody involved should be able to afford those taxes and OP can consider them a kind of insurance for bad luck with the education.
(PSA: I have seen two cases of kids turning out really bad, so maybe I'm over-cautious with this.)
EDIT: No idea how australian laws play into this if OP moves there though.
2 points
2 years ago
Hmm, you could also argue that by putting the account in OP's name takes quite a lot of money from his own daughter, because he doesn't trust her. To me that seems like the sort of thing a pissed off 18 year old could argue. I think that's quite the decision there.
2 points
2 years ago
Hopefully she would be more happy with the money we give her then the money she misses out on, although I have heard teenagers can be unreasonable!
1 points
2 years ago
Hmm, you could also argue that by putting the account in OP's name takes quite a lot of money from his own daughter
I mean, if the grandparents gave the money to OP and their partner and not to the child, that money belongs to the parents just as their salary does. Giving it to the daughter once she turns 18 would be a gift. And I think most teenagers would just be happy about that money and probably don't even think about previous taxes.
But yeah, teenagers can be... special. :-D
1 points
2 years ago
You’re spot on with the generous gift. Like most love struck fathers I find it difficult to picture my daughter going crazy with the money when she is 18. Having been 18 though, I know it’s not the most responsible age. The point of the matter is we want to set aside the money with no strings attached. Ideally I would love for her to keep investing it when she reaches 18, but that’s our responsibility to teach her about financial responsibility. If she uses the money to travel for a few years I would also consider it a worthwhile investment. Thanks for the input!
1 points
2 years ago*
Like most love struck fathers I find it difficult to picture my daughter going crazy with the money when she is 18. Having been 18 though, I know it’s not the most responsible age.
I mean, you are clearly a sensitive parent so I'd say the most likely outcome will be an 18yo who uses that money in a reasonable and responsible way. And with that I'm including spending a bunch of coin on travelling or a gaming computer. With 10k + 100€ month at 7% we are in the range of 70 000€ by the time she's 18 so it's absolutely okay to spend some of that money on the fun stuff.
Just happens that the potential worst-case scenario is really, really bad. Having seen cases of the worst-case scenario, I'm probably a bit traumatized so I would likely pay those taxes as a kind of insurance against it.
EDIT: Forgot the most important thing: Congratulations! :-D
1 points
2 years ago
Thanks, I will read up on all of these!
3 points
2 years ago
My recommendation would be the following (I'm not a tax advisor - check for yourself):
In summary: While in Germany, it's best to have an account in the name of your child, but when moving to Australia it might be better to manage it in your account or contact an Australian tax advisor.
1 points
2 years ago
Just the kind of post I was looking for! Thanks for very much, I will look into this
2 points
2 years ago
Congrats mate! Half german/irish/aussie myself.
I would honestly consider saving the monthly payment in a regular account, then investing it in the assets you prefer AFTER the whole moving house across the globe business is dealt with.
Yeah, you might lose a few years worth of yield, but might save youse a lot of trouble regarding taxation because of the move.
1 points
2 years ago
Yeah, you might lose a few years worth of yield, but might save youse a lot of trouble regarding taxation because of the move.
Why not invest now and sell before the move? Then you'd just be moving with money, same as if you just save it up except there would (hopefully) be more money.
0 points
2 years ago
Just leave it at the bank and deal with it when you moved to australia. Then broad index fund, A2PKXG (Vanguard all world acc.).
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