Have you ever thought about saving money to secure your children’s future ? Are you doing financial planning thinking ahead? Know that regardless of the age of your children, you can start investing to pay for college, for example.
Many people want to make a nest egg for their children , but they don’t know which is the best investment for it . After all, which is better, savings or private pension for children? That’s what we’re going to talk about today!
Did you find it strange to talk about private pension for children? Do you know savings, but don’t know if it’s the best investment? Don’t worry, continue reading and we’ll explain everything about each of the applications and help you choose between them.
Savings or private pension for children: where to invest your money?
Knowing where your money goes is very important when investing, so let’s explain how savings and private pension works. Thus, you can make the best choice, considering your objective and investor profile .
Let’s get to know the modalities for you to decide between savings or private pension for your children!
The savings account is an old acquaintance of investors. It is very popular and because its operation is simple, it ends up being the most popular destination for saving money .
Another point is accessibility . In general, when a bank customer opens a checking account, it already comes with savings, which ends up facilitating its use. Especially for those who use the bank application and manage to solve everything on their smartphone.
But that’s not all that makes the savings account so popular. High liquidity is an attraction for those who keep money in savings. It allows the amount to be redeemed at any time.
The income from savings is linked to what is called the “anniversary of savings”. If you make your first deposit on the 10th, your account will have a birthday, each month, always on that day. That is, if you redeem the money on the 8th, you will lose the income for the entire month .
Another advantage is the exemption from Income Tax (IR). But as not everything is rosy, another important feature of savings is low income. This is one of the points to be considered when deciding between savings or private pension for children.
Currently, savings yield less than inflation . That is, your money still loses purchasing power.
Now let’s move on to our next modality!
In general, people think that pension plans are only used for retirement . But that is not true. Let’s explain why!
Private pension works as follows, anyone can make a plan. After that, the investor makes contributions, monthly or sporadically, with the chosen amount . This amount is invested in a social security investment fund .
This fund can be aggressive, moderate or aggressive . It all depends on the investment strategy you choose.
One of the advantages of this modality is that you can put together a plan that is your face. Define the plan modality ( PGBL or VGBL ) and the taxation table .
Not to mention that it’s a great way to have financial organization , it helps you to have discipline and in the process of saving and investing !
Another thing you need to observe when making savings or private pension for children is time. As we are talking about, in the case of investments for children, you can use the term to your advantage and take advantage of the tax benefits of social security (ways of paying less income tax).
For investments over 10 years, with the regressive table, you have the lowest rate (percentage of tax charged) on the market: 10%. Remembering that each contribution needs to reach 10 years.
This is the only investment that offers this advantage, and it is also important to emphasize that there is no minimum age to take out the pension . Therefore, you can do it as soon as your child is born and you have the child’s documents in hand.
And finally, we come to the main point!
Savings or private pension for children: which should I choose?
It’s important to remember that making an investment with the future in mind is the best thing you can do for your child.
Can you program yourself in advance to pay for college, an exchange program or who knows a car at 18? What to do with the money is up to the investor, but when it comes to choosing between savings or private pension for the children, some points need to be considered.