Building a Secure Future for the Next Generation
Starting a savings plan for children or grandchildren provides them with a vital head start, whether for a driver’s license, education, or a first home down payment. Long-term savings allow for the power of compound interest to maximize the eventual benefit.
Investments involve risk.
Choosing the Right Savings Form
The most critical decision is whether to save in your own name or the child’s name. This determines who controls the funds and when the child gains access.
| Feature | Capital Insurance (Your Name) | ISK (Your Name) | ISK (Child’s Name) |
|---|---|---|---|
| Control | You decide when to pay out. | You decide when to pay out. | Child gets access at age 18. |
| Beneficiary | Easy to designate specifically. | Requires a will for earmarking. | Legally belongs to the child. |
| Taxation | Standard tax (deducted by bank). | Standard tax (via tax return). | Standard tax (via tax return). |
| Death Benefit | 101% payout to beneficiary. | Estate benefit. | Belongs to the child. |
| Annual Fee | 0 SEK (plus risk premium). | 0 SEK. | 0 SEK. |
Recommended Strategy: Capital Insurance in Your Name
We generally recommend saving in a Capital Insurance (KF) in your own name with the child as the beneficiary. This offers several professional advantages:
- Control: You decide if the child receives the money at 18, 21, or 25, rather than it being released automatically at 18.
- Flexibility: You can set up automated monthly payouts (e.g., for student support).
- Simplicity: The bank handles all tax deductions and reporting.
- Safety: Includes repayment protection of 101% of the value in the event of your passing.
Tips for Fair Savings
If you are saving for multiple children:
- Joint Pot: Treat the savings as a single joint portfolio.
- Equal Growth: By using a shared account, all children benefit equally from the same market movements, ensuring a fair outcome regardless of when each child’s specific saving started.
How to Get Started
Automated Advice with Nora
Our savings robot, Nora, can help you set up a tailored fund portfolio in three steps:
- Financial Profile: Answer questions about your goals and risk tolerance.
- Fund Proposal: Receive a customized recommendation.
- Execution: Start your automatic monthly savings plan.
Common Questions
How much should I save?
While the average monthly saving per child is often between 300 and 500 SEK, the most important factor is consistency. Even small regular contributions grow significantly over 18 to 20 years.
What risk level is appropriate?
Since children’s savings are typically very long-term, many parents choose a higher risk level (e.g., equity funds) to seek higher returns, accepting short-term fluctuations for long-term growth.
When should I start?
It is never too early to start. Prioritize your own emergency buffer first, then begin regular contributions to the child’s fund as soon as your budget allows.
