Michael Andre Collins, manager of the Youth Banking Unit at JN Bank, says most, if not all, grandparents want to provide a secure financial future for their grandchildren.
“The reasons may vary, but several seniors with whom I have spoken simply want to help their younger generation get an easier head start in life. They want to provide them with the opportunities and advantages they didn’t have when they were growing up,” he said.
“And, many want to be in a position where they can leave behind a financial windfall to their grandchildren. Whether it’s with regular payments towards boosting savings or helping with a first car, university tuition or towards the deposit on acquiring their first house, it’s a position many senior citizens relish.”
Mr Collins noted that no matter the reason, there are several ways that grandparents can save for their grandchildren’s future. As we celebrate Child Month, the JN Bank Manager provides a few options:
Children’s Savings Account
Mr Collins advised that one way grandparents can save for their grandkids is by encouraging thrift from an early age. “You can use a basic children’s account to put aside money on a regular basis for your grandchild established in the child’s name. You can also encourage the child to make regular deposits to the account as well, as a way of teaching them about money management, budgeting, the importance of saving for the future and other aspects of personal finance,” Mr Collins outlined.
He further recommended that, before establishing a child’s savings account, it’s important to do some research, shop around for rates and features and decide what the most important priorities are for having a savings account for your grandchild.
High-yield Savings Account
Another option is to open a high-yield savings account. As the name suggests, a high-yield account tends to offer a higher rate of interest than a regular savings account and often encourages a dedicated minimum savings amount regularly to encourage the habit of saving.
A high-yield savings account can be a useful option for putting money aside for your grandchildren’s future. “It offers a middle ground for your money, offering protection of your deposits through deposit insurance, and a yield often higher than a regular savings account, though somewhat less than you could potentially earn from riskier investments,” Mr Collins informed. He noted that JN Bank offers high-yield savings accounts where persons can save in Jamaican or foreign currency.
Tax-Free Certificates of Deposit
He further advised that senior citizens can also opt for a long-term certificate of deposit (CD), especially one with a tax-free feature. CDs, also referred to as fixed deposit accounts, are like savings accounts but pay more interest in exchange for a promise that the account holder won’t touch the money for a set period.
Mr Collins informed that JN Bank offers a tax-free, high-interest-bearing long-term Certificate of Deposit with insurance protection, which is ideal for this purpose. “You can open the JN Bank Goal Saver Account, for example, with a minimum of J$100,000 and save for a period of seven or ten years. This is a smart way for grandparents to set aside lump sums to finance and safeguard their grandchildren’s future needs tax-free,” he said.
He noted that when the child turns 18, he or she becomes eligible to have access to the account at maturity. Other features and benefits of this type of CD include:
- Saving for medium to long-term goals such as tuition, purchasing a car or a house
- It’s tax-free*
- You can earn up to 30% interest on your savings at maturity.
- Your deposit is automatically insured in the event of death, disability or critical illness. This means your deposit is secured and guaranteed to be returned with interest to you or a beneficiary if the accountholder becomes disabled or in the event of death.