Stocks: “Economy”: give children money to buy funds

Stocks: “Economy”: give children money to buy funds

Invest ten euros in a fund every month – this is how children could learn how to deal with stocks at the age of six, say the “economists”.

According to the “Economists”, children in Germany need to be better introduced to the capital market. To this end, the experts are proposing a “child entry allowance” for all girls and boys aged six and over. Funded by the state, children could pay around ten euros a month into a selected fund with a high share of shares, writes the Council of Experts for the Assessment of Overall Economic Development in a new policy brief. With long-term investments, solid returns are possible with low risk.

“Unlike previous measures, the proposed child start-up allowance aims to strengthen financial behavior through learning from experience – rather than theoretical knowledge,” explained expert Ulrike Malmendier. The program also has an indirect effect on the parents’ financial literacy, as they initially take over the investment for their children.

According to “Wirtschaftsweise”, the concept would cost the state around 1.5 billion euros annually in the long term. It stipulates that you cannot have the money deposited paid out during the savings phase. As soon as the children are of age, the sum should be able to flow without any earmarks. It should also be possible for the “children’s start-up allowance” to be converted into a reformed Riester pension and the fund to be saved further. At school, children should learn everything they need until the end of the savings phase so that they can then make decisions independently.

Source: Stern

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