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Created on 01.12.2021

Put a smile on someone’s face with a youth savings account: what to bear in mind

Want to give your own children, your godchildren or grandchildren a financial head start as they reach legal age in the form of a savings account? What a lovely idea. In this article, will explain everything you need to know about opening a youth savings account.

Is there a greater birthday gift than giving a young person a bit of a financial head start? Unlikely! It’s never too early to start building up a nest egg for your loved ones by opening an account.

The longer a financial investment’s term, the greater the rewards

Opening up a youth savings account or savings account early is well worthwhile. After all, every little helps – especially if you actually invest money rather than leave it sitting in a savings account. The potential returns you can expect from this sort of account may be much higher than the interest you get on a savings account.

Compound interest also ensures the starting capital you’ve invested increases at a disproportionately high rate over the years. Read more in our article “Compound interest and the compound interest effect explained in simple terms”.

Reap long-term rewards with a funds saving plan

A funds saving plan is also a smart way of investing in the future of your children, godchildren or grandchildren. Long-term funds saving plans are ideal for children. Why? Because they have a long investment horizon. This means that price fluctuations are evened out in the long term. 

Example

Let’s assume you transfer money to your loved one’s account until they reach 18 years of age: The compound interest effect means that a monthly contribution of CHF 20 and a hypothetical average return of 4% over the course of 18 years will yield around CHF 6,288.  

What’s great: even children can learn how to invest

Investment products such as a funds saving plan are a perfect way of getting young people interested in finance and investing. You can show them a real example of how investment works, or introduce them to the world of finance.

Of course, they can also invest themselves and carry on investing after their 18th birthday rather than having a lump sum paid out to them.

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