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Created on 29.01.2019

Investing in the future of your children

The piggy bank has had its day. The funds saving plan is here to replace it and can be used to build up significant assets in small steps. You can start investing with as little as CHF 20. This is not just an attractive opportunity for investors wishing to make more of their own money, but also for parents wishing to invest in the future of their children. Why? We explain it to you here.

How can I ensure a good start to adult life for my child? Maybe with some initial financial assistance for him to fulfil his first adulthood dream? A financial investment is also suitable for this. Because investing money does not have to entail investing large sums. You can also make more of your money with regular small contributions rather than simply saving it. And at the same time you can also invest in your children’s future. That is precisely what the funds saving plan is for.

Every two, four, eight or twelve weeks you can purchase fund units for an amount of your choice starting from CHF 20. This way, your invested assets will slowly but steadily grow. You will not only benefit from more attractive returns than if you were to place your CHF 20 note in a piggy bank or pay it into a savings account , but also from the cost averaging effect. We explain precisely how this works in the article entitled “Put it simply, please! What is the cost averaging effect?”.

Invest money in the long term and achieve more

For parents, the funds saving plan is a clever opportunity for investing in the future of their children, as children are actually predestined for long-term funds saving. The reasons for this are obvious:

  • Children have a long investment horizon and therefore offset price fluctuations particularly well in the long term.
  • You don’t have to invest any large sums and are barely affected by the ups and downs of the financial markets – which means you also run no risk of being unsettled by them.
  • What is more: by opening a funds saving plan when your child is born and regularly making payments into it, you’ll be able to offer your child an attractive boost to start their adult life when they turn 18. An 18-year funds saving plan pays off very well: with the compound interest effect, around CHF 6,288 can be accrued with a monthly payment of CHF 20 and a hypothetical average return of 4% over 18 years. Is that not a good alternative to a savings account?

Learning to invest with small amounts

Funds saving plans are particularly suitable for systematically building up assets with a view to a specific target and in doing so reducing the risk of price fluctuations and starting at the wrong time. They are therefore not a bad opportunity for financing your children’s studies with smart investments or enabling them to spend some time abroad or take their driving test when they get older.

Your child can naturally also remain invested rather than having his assets paid out. He might therefore start investing himself when he reaches 18. A helpful feature here is the fact that funds saving plans are flexible: you can increase your payments at any time, reduce them (to a minimum of CHF 20 per month) or suspend them if things should get tight financially. In addition, a funds saving plan is also a simple way of giving your child a practical understanding of the topic of investing and answering questions such as how exactly investing works, what happens on the stock markets, how interest and compound interest work in detail, and what a fund actually is.  

How it works: the standing order for investing

It’s easy to open a funds saving plan for your children: all that is required is an account and a custody account that you can open for your children. Fund units are then purchased directly for the investment amount you determine and at your preferred intervals – a bit like a standing order. This can be done conveniently, simply and online via e-finance. The “Supermom” explains how a funds saving plan works and why it pays off for parents and children.

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