Baby steps to investing money in child’s future

Q OUR first child is due late May and we are really looking forward to it. My parents are giving us €15,000 and I am also hoping to invest the €140 Child Benefit for second- and third-level education. First of all, where do you advise we place the money and what else would you do in our situation with regard to finances? THANKS, Paul – Bray, Co. Wicklow

A Congratulations, Paul, to you both on your impending life-change – a change for the better I might add as my own three children prove! The stock market has proven time and time again to be the best return on any asset class – property, bonds, gold or any you care to mention… 10.72% was the average annual growth from 1991 to 2020. You could invest both the €15,000 and the monthly €140 Child Benefit in a regular stock-market saver account (e.g. Irish Life’s Pinnacle brand or Zurich’s LifeSave Savings Plus account). The four years of third-level costs alone will set you back €42,000 and that isn’t counting the obligatory Master’s that every student now has to complete. Even if you could put away the Child Benefit from the first month until it stops on the 19th birthday (it was the 18th birthday up to the last Budget), you would have only accumulated a total of €30,240 – nearly €12,000 shy of what you would need. Also, now that you will have a dependent, you should set up separate parents’ life cover until completion of that third level in case anything happens to either one of you; plus, also look at income protection – the only type of insurance that allows tax relief at your marginal rate on the premiums paid. This will pay 75% of your monthly income less any social welfare from your being unable to work, until you resume work or your pension kicks in. Take professional advice or email me for details. Well done again and enjoy it all.