First of all, do you remember what you were able to buy with EUR 20 back in 2002, when the euro was launched? Today, the purchasing power of these EUR 20 is significantly lower because prices have gone up a lot for most goods. Knowing that, instead of thinking of the amount of money your child will get, think of what he will be able to buy with the money you saved for him so far.
If you have 0,5% interest on the savings account of your child and the inflation is at around 1%, you will for sure lose purchasing power over the years, while you think that you are actually “saving” money.
In such a scenario, having EUR 10.000 on your savings account today will only be worth EUR 9.500 in about 10 years’ time.
Think about it: on one side, kids are growing up very quickly, that is for sure. On the other side, parents tend to save money for their children until they are 18 years old, so for several years, they are putting money on the side. Don’t you think that in this time period, there is something smarter to do regarding your savings options?
The period of childhood which is extended in several years, is to be considered as your main asset. The longer your time horizon is, the less probable it is for you to lose money in the stock market. As an example: Since 1971, there is no 15 years’ time frame when an investment into the S&P500, a large U.S. index, would have resulted in you losing money.[1] [2] Investing is your best alternative.
If there is one occasion when investing is a great idea, it’s surely all over your kids’ childhood.Luc Sinner, Deputy Head of Marketing
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