Do you still have your Communion money?
This is the question often asked rhetorically if it’s thought someone is being a bit tight with their money. It gave the impression that the miserly had not spent their Communion money even as an adult.
I am explaining this for those who didn’t grow up in Ireland, everyone else knows exactly what I mean.
READ MORE: Morgan O'Connell's money column: What influences our spending?
With the celebrations of the sacrament of the Eucharist upon us, there is, secondary to the religious aspect of this great day, a promise of a few quid from the rellies.
On a quick ring around, I discovered it can be substantial, but varies widely.
I am still traumatised I only got a fiver and a Parker pen for my Communion as my mother stood guard, batting away any outstretched hands clutching cash with, “Ahh, he is OK, he doesn’t need any money”.
Let’s move on, though. Say we are talking €500 as a fairly healthy “result” from the day. What do you do with it if you want to be the butt of people’s jokes in 25 years’ time?
Here are some suggestions:
1 Post Office kids accounts: The traditional route for much of the childhood savings in Ireland.
Gone are the grubby, dog-eared Post Office savings books which are filled in manually for each transaction, now there is even an app, called Money Mate for kids through Post Office Money, which promises to give kids, eh, independence and spending power, while you “retain control”.
It is more to get them used to using electronic banking rather than a dedicated savings plan, but still some might find it useful as an educational tool and a gateway into personal finances.
It has a handy feature to pay your kids for chores around the house. My brother might need this, as he recently paid his son €5 one Sunday morning to get his phone upstairs. Hmm, smart nephew.
The Post Office also does a Childcare Plus 6 Year savings scheme, which gives 5.5% for the 6 years, or 0.98% tax free annual equivalent rate. There are terms and conditions of savings so check them out first.
2 Prize Bonds: These were a popular Communion gift when I was a child. Each bond, valued at €6.25, would not attract any interest, but it’s unique number would give you access to a weekly draw, which could net you prizes of €50, €100, €500, €1,000 and monthly prizes of €50,000, with €250,000 up for grabs four times per year.
This gets people’s lotto brain working a bit, but really statistically the return is very low. The Prize Bond company gives the Euro amount of prize payout each week and last Friday’s was €305,600. Someone is getting it. It is also guaranteed by the State and you get your money back when you want.
3 Invest: Typically this would give greater returns over a long period, far outstripping Post Office and bank accounts. Take an investment of €500 into a fund provided by one of the main fund managers in Ireland.
Past performance doesn’t guarantee future performance, but one of the global funds I see has had an annualised growth every year of the past 20 of 7.2%. If you had put this €500 away for this period, you would be looking at a grossed up amount of €2,100, before tax and charges, but let’s not ruin it by discussing charges at this point. Always take professional advice with investments, though.
4 Banks and building societies: EBS pay an interest rate for kids up to age 11, subject to DIRT, of 1% up to the maximum saving of €5,000. AIB and BOI offer junior saver accounts which give 1% for AIB and 0.75% for BOI gross. Your €500 would make you €3.35 per annum, wow. I do note that two of the banks have started to increase their general interest rates for savings deposits during the week, which is a good start. I was speaking to a financial advisor in India during the week and savings interest rates are 8%.
5 Credit Union: The Credit Union savings offerings makes me feel a bit more warm and fuzzy than the others. They stress that while each CU is its own entity and therefore offers different returns, they are not for profit and pay out ‘dividends’ instead of interest. Credit unions are a good way to build up a savings habit in the community, while improving your credit rating.
6 Attic: Interesting choice. This and under the mattress was also popular. There is also the potential you will forget about it and someone will find it 100 years hence, but probably won’t get them a pint of milk in 2123.
7 Cryptocurrency: “Son, I’ll put that away in Cryptocurrency”. “Dad, how does that work?” “eh? Ahem ehh, go ask your mother.” Enough said.
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