Saving for a godchild or grandchild

Do you have a child in your life for whom you would like to save and invest money? Stocks and investment funds are valuable gifts for a child and can have far-reaching effects. Saving through insurance for a child is easy and does not require the parents' consent. Investing is also possible through the child's account if the parents invest the funds you transfer to the account in shares or funds.

"We grandparents are saving for our four grandchildren. Every month, we put aside a small sum for each of them for the future." Irene, Hyvinkää

Why save and invest for a grandchild or godchild?

By saving, you secure your godchild's or grandchild's future financially and give them the freedom to follow their dreams. When saving for children, the investment horizon is often years or even decades. That's why it's a good idea to consider forms of saving that are more profitable than a standard savings account. With a long investment horizon, you can save thousands of euros to support a child financially.

An investment is an alternative to a material gift. It is responsible and can have far-reaching effects. Thanks to compound interest, the originally gifted and invested sum can grow over the years. 

 

How to save 11,000 euros for a godchild or grandchild

Monthly investment: 30 €
Expected return: 6.5%​
Investment period: 18 years
Amount saved: €6,480
Income: €5,188
Total: €11,668

How can I save for a grandchild or godchild?

You can save and invest for a grandchild or godchild with funds or stocks. Saving through insurance for a child is possible without the separate consent or authorisation of the parents of the godchild or grandchild. 

Saving through insurance with OP Unit-linked Insurance, or endowment insurance, is a flexible way to invest in funds on behalf of a child. Select a child as the beneficiary and begin saving with a monthly sum such as 100 euros a month or a one-off investment. The funds are transferred to the child selected as the beneficiary once the policy ends. You can choose the end date yourself. The end date cannot be sooner than 3 years after the start date. During the policy's validity, you can change investments within an insurance wrapper without tax consequences. You will not have to pay tax on your accumulated returns when changing investments, as returns are only taxed when the savings are withdrawn.

 

You can also transfer funds to the child's account, after which the guardians can put the sum in an investment fund or stocks. You can automate monthly transfers to the child's account, for example. The parents can in turn set up monthly investments, automating the entire process. You can begin monthly investment in a fund on behalf of a grandchild or godchild with just 10 euros a month.

The child's guardians can authorise the godparent or grandparent to manage the child's investments. The authorisation can be granted at an OP cooperative bank. 

Good to know about taxation when saving for a godchild or grandchild

You can gift 138 euros a month, or 4,999 euros over a period of three years, in money or other property to a godchild or grandchild without tax consequences. The limit of 4,999 euros is individual, which means that both grandparents or godparents can gift the sum to a child without paying gift tax. The return on investments is taxed once the funds are withdrawn. 

How to gift your own fund units or stocks

You can gift your own fund units or stocks to a child, godchild or grandchild. Draw up a deed of gift for the fund units or stocks between the donor and recipient. Send the deed of gift to us by message on OP-mobile or at op.fi. We will take care of transferring the fund units or stocks.

 

Preparing a deed of gift

A deed of gift must indicate the following:

  • The personal information (name, address and personal ID code) of the recipient and person giving the gift (formally called the ‘donor’ in this context).
  • the book-entry account numbers of the recipient and donor, if you are donating shares or ETF fund units
  • information about the gift (type, number and total value of securities being given)
  • date and signatures.

In addition, a deed of gift may have an exclusion of marital right, meaning that the recipient’s spouse has no claim on the donated asset. In such a case, you will need two competent witnesses who sign the deed of gift. 

If the recipient is a direct descendant, the deed of gift may state whether the donation should be considered an advance on inheritance or a gift. In this context, the donor’s descendants are defined as the donor’s children or (if the children are dead) the donor’s grandchildren.

Instruct the recipient to send the deed of gift to their OP cooperative bank.

 

What happens to the investments when the child turns 18?

After the child has turned 18, control of the investments is transferred to the child. In the case of insurance assets, the child selected as the beneficiary receives control of the assets once the policy ends. We recommend having a discussion with the child about savings and investments, and how to manage them. We are also happy to assist young people manage their savings on a long-term basis and responsibly. A person aged 18 or over may also book an appointment for free investment advice.

Saving on behalf of a child
Secure your child’s future by saving.
Stock and investment fund gift card
Solve your gift troubles with a stocks and investment fund gift card. Investments an excellent gift for a friend, godchild or grandchild.
This is an advertisement. Please note investing always involves risks. The value of investments can rise and fall, and the investor can lose part of or all the invested money. Unit-linked insurance is issued by OP Life Assurance Company Ltd, with OP cooperative banks acting as its agents. OP Fund Management Company Ltd manages the funds, with OP Asset Management Ltd as the portfolio manager. Standard fees are charged for the following special common funds: OP-Public Services Real Estate, OP-Forest Owner, OP-Rental Yield, OP-Alternative Portfolio and OP-Private Equity special common funds.