Investing for the future of your children

When you become a parent, carefully planning your tomorrow becomes a top priority. If the financial security of your family is uppermost in your thoughts, start investing for your children now. From savings plans to children's savings accounts, read in our article what tools you have at your disposal to give your loved ones more financial peace of mind.

Investing for your children: when to start

How many times have you been told that the birth of a child changes your life? And that is indeed the case, impossible to deny. Behind this cliché, however, lies a great truth: from the very first moment everything takes on a new meaning. Responsibilities increase, as do concerns about what you can concretely offer them.

It is not only about everyday expenses, education and recreation, but above all about future prospects. That is why it is never too early to start investing for your children: ideally, the earlier the better (or perhaps when you receive some unexpected money from an inheritance or insurance). In this way, you will be able to think long-term, reaping the benefits of the main financial solutions on the market, and form a sort of small (or hopefully large) piggy bank.

The most common solutions

As with any other investment, there is no 'one size fits all'. The financial products currently available in Italy have different characteristics: like a tailor-made suit, you have to select the one that fits you best. And if you want to learn more about investing for your children, our financial education section can also offer you extra support in making an informed decision.

Not sure where to start? Let's see which are the most popular options in Italy.

Children's savings account

The best known solution for those who want to invest for their children, probably because it has existed for decades, is the classic children's savings account to be registered directly in the child's name. This is a paper or dematerialised booklet that is handed in at a bank or post office at the same time as opening a savings account. The various transactions carried out by parents (or grandparents, often) are noted on it, together with expenses and interest.

As it is not a current account, since the permitted transactions are limited to deposits and withdrawals, it does not allow payments or card connections. Generally, there is no fixed fee and it provides for preferential taxation. However, the children's savings account has a low yield, which increases slightly according to age group.

Savings plans for children

Another alternative is child savings plans. Unlike the savings account, where sums can be freely credited, this formula is based on periodic deposits into a special fund. The capital is then managed by the bank or insurance company with which the plan was concluded.

At the end of the contribution period laid down in the contract, it will then be possible to redeem the capital with the returns accrued. The return depends on the financial products in which the commissioned company chooses to invest the money.

ETFs savings plans

An innovative choice in this area are savings plans in ETFs (Exchange-Traded Funds), which offer several advantages over traditional funds often offered by banks. ETFs are known for their transparency and low management costs. Unlike mutual funds, ETFs replicate market indices, reducing the performance risk associated with active management and offering broader diversification. Moreover, ETFs are generally more liquid and flexible, allowing investors to react quickly to market changes. Investing in ETFs through savings plans can therefore be an effective way to build a diversified, low-cost portfolio suitable for a long-term investment strategy for one's children.

Postal savings bonds for minors

Postal savings bonds are paper or virtual bonds issued by Cassa Depositi e Prestiti and guaranteed by the State. Purchasable at post offices, they offer fixed returns that grow year by year until the children reach the age of 18. Returns are taxed at a reduced rate (12.5 % instead of 26 %), but there is a stamp duty of 0.2 % on the nominal value of the voucher if it exceeds 5,000 euro.

Investment plans on behalf of parents

In addition to the possibilities listed above, it is also possible to make investments in one's own name, to be allocated to one's children according to one's financial goals. This option grants more freedom of action, since it is not tied to a minor. In addition, one can bet on a varied portfolio to maximise the chances of increasing one's invested capital and thus ensure a prosperous future.

Are you thinking of investing for your children? Find out how Scalable Broker can help you make your savings pay off.