Children's Retail Outlet Launches by Trade Republic - Struggles to Gain an Edge Over Competition
Trade Republic Introduces a Children's Investment Account
Digital investment platform Trade Republic has launched a new account specifically designed for children, aiming to help parents start investing early and accommodate unique features such as the "Trade Republic Kids' Allowance."
This newly introduced account is now accessible to German users without any waiting period, possibly targeting competitors like Scalable Capital, whose similar offering has been available only with a waiting list.
The new feature became accessible on Tuesday afternoon, with customers noticing a banner on the app's homepage directing them to the kids' account.
Trade Republic aims to facilitate early investments for children, offering benefits such as free ETF savings plans and interest on the entire balance. The unique "Trade Republic Kids' Allowance" is designed to cover the fund costs of select Vanguard ETFs, including the FTSE All World, and automatically reinvest the funds while the child is a minor.
Co-founder Christian Hecker propounded the significance of early wealth accumulation, viewing it as a potential solution to future financial uncertainties, particularly concerning the potential exhaustion of the pension system and growing public debt.
Furthermore, Trade Republic highlights tax advantages for investors. Parents can use the child tax allowance of approximately €13,000 annually, potentially enhancing net returns over the years, and maintain a 2.25% interest rate on the balance.
Discussions on the Trade Republic community forum mention a "Child Savings Account," but the platform has yet to offer specific details about such an account catering to children's investments [2]. Trade Republic's general savings accounts offer competitive interest rates, providing parents an avenue to save for their children [1][3]. However, Trade Republic does not currently support children or joint accounts [3].
Possible state subsidies, such as a monthly payment of €10 from the age of six, are being considered as part of the kids' account offerings, though its implementation is yet to be confirmed [4].
A hypothetical calculation demonstrates the potential growth of an investment: starting with €100 per month from birth and averaging a 7% return, the account could accumulate over €43,000 by the age of 18. If left untouched and reinvested, it could grow to a substantial amount by retirement age [4]. A new option enables regular contributions from family or friends, promoting savings as a collaborative endeavor [4].
As always, it is important to remember that investments can be risky, with the potential for total loss of the invested capital. The provided articles, data, and forecasts should not be construed as advice to buy or sell securities or rights [5].
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[1] Trade Republic general savings accounts:
[2] Trade Republic community forum discussion:
[3] Trade Republic account types:
[4] Hypothetical calculation example and state subsidy: Source: Trade Republic
[5] Disclaimer:
What kind of investments can parents make for their children on Trade Republic? Parents can start a children's investment account with Trade Republic, offering features like free ETF savings plans, interest on the balance, and the "Trade Republic Kids' Allowance" that covers fund costs and reinvest funds while the child is a minor. Additionally, they can use the child tax allowance and potentially receive state subsidies, such as a monthly payment starting at age six.
