Friday 19 January 2018

Your Questions: Saving communion cash good way to learn

 

Communion. Stock image
Communion. Stock image

Aine Carroll

Question:: My daughter has just made her First Holy Communion. She has received a lot of money from friends and relatives. I would like to use this opportunity to help her develop some good habits around saving and spending. Have you any tips on how I should go about choosing a savings account for her - or any suggestions on how I could help her to manage her money? Roisin, Carlingford, Co Louth

Answer: One of the best ways to help children learn about money is to encourage them to open a savings account. Banks, credit unions and the Post Office offer kids' savings accounts. If the account has online access or a savings book, you can show your child at any time how her savings are growing.

The key to continuing the savings habit long-term is to keep it fun and keep them involved. Many financial institutions have entertaining characters and online resources which can help to make saving fun and interesting for kids.

Encourage your daughter to keep up good financial habits. Once she opens a savings account, encourage her to save some of her pocket money regularly. Encouraging her to put money aside, either as a lump sum or in a regular savings plan, helps form the saving habit.

Pocket money can help children understand what money can buy them and that, if they want to buy something big, they will have to save up for it. It is important that they understand that they will need to make these choices, and it creates opportunities to have discussions about what they plan to do with their money.

The important thing about pocket money is setting out the rules in advance - how much will they get and on what basis it is given. For example, do they have to complete chores to earn it? It is important to remain consistent with these rules as it helps children develop an understanding of the value of money.

 

Suspicious mileage on car

Question: I recently bought a two-year-old car from a local garage. A few weeks after I got the car, it began to give me a lot of trouble. I told the garage about the problems, but they inspected the car and said there was nothing wrong with it. I then took it to another mechanic who said that the timing belt needs to be replaced. Now I'm getting suspicious about the mileage on the car, as the car is only two-years-old and the timing belt shouldn't need replacing yet. What can I do to check the history of the car? Donna, Tallaght, Dublin 24

Answer: If you think your car has been clocked, the first thing you should do is to try and get more information on the car's history. There are a number of companies who can check the history of a car for you for a fee.

If you search online, you can compare the cost of carrying out a check from the companies that offer this service. This check may uncover information which the dealer may not have informed you about. You should also go back to the garage and ask them to confirm, in writing, what the mileage of the car was when you bought it - and ask them to provide any evidence of the mileage.

If you buy a car from a dealer, you should be able to rely on accurate information. The car should be of merchantable quality which means that it should be of reasonable, acceptable quality given the age and history of the car - and roadworthy. It should also be as described and match the verbal description or in any advertisement.

Dealers who mislead consumers about the cars they are selling, or who sell unsafe cars, are breaking the law. It is an offence for a dealer to provide misleading information about the car including its history, mileage, specification and any repair work needed. It is also an offence under consumer law for a dealer to withhold material information when selling a car. 

If you believe that you were given false information about the car's condition or mileage, you should contact the CCPC through its consumer helpline on 1890 432 432.

 

Options for €10,000 nest egg

Question: My elderly aunt recently gifted me €10,000, and I want to put this away as a nest egg for my future. I looked at putting the money into a savings account, but realised quickly that the interest rates are so low that I'm not sure it would be worth my while. Someone suggested an investment fund but I have no experience in this area, so I am worried about the risk. Have you any suggestions? Mary, Killarney, Co Kerry

Answer: The first step is to look at your financial situation to help maximise the benefit of your nest egg. If you have any debts outstanding (such as credit card debt, an overdraft or a personal loan), you should consider paying these off.

Interest rates on these products are generally high - in particular if you have an outstanding balance on your credit card. If you have a mortgage, you could also consider paying off a lump sum which would mean you would pay it off quicker and therefore save money on interest. However, if you have a fixed rate mortgage, you could be charged a penalty to pay off a lump sum - so talk to your lender about your options first.

Return on savings may be low but if you are looking for a risk-free option, this is generally the most straightforward option. Do bear in mind that any inflation will mean that your money loses value over time.

A good place to start if you want a deposit account is to compare the various products available. There is a handy lump sum savings comparison tool on the CCPC's website which you can use.

This tool shows the current rates and features of all savings accounts on the market for fixed-term deposits (where you lock your money away for a certain time), notice accounts (where you must give a certain amount of notice for withdrawals) and instant access (where you can withdraw money at any time) accounts.

If you can afford to lock your money away for a set period, a term deposit account will generally offer a higher return. However if you need immediate access to your funds, you can choose an instant access account. You could also split your money into a term deposit and an instant access account if you think you may need immediate access to some, but not all, of your nest egg.

Investments offer the potential for a higher return than savings but involve a greater degree of risk. Before you decide to invest, you should consider the impact of losing some or all of your money. 

Typically, the greater the return you want from an investment, the riskier the product, so you need to be careful that the level of risk you are taking on suits your circumstances. 

It is crucial that you review the charges associated with investments as these vary depending on the type of product you invest in. Thinking about the access you will have to your money is also vital, as well as fully understanding the terms and conditions of the product.

If you need more help, you should contact an authorised financial adviser who will help you review your options. A list of independent financial advisers is available on the Central Bank of Ireland's website.

Aine Carroll is Director of Communications and Market Insights with the CCPC (www.ccpc.ie)

  • Email your questions to  lmcbride@independent.ie or write to  'Your Questions, Sunday Independent  Business, 27-32 Talbot Street, Dublin 1'.  While we will endeavour to place your questions with the most appropriate expert for your query, this column is not intended to replace professional advice.

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