You want to give your child the best - and that also applies to their financial future. Children's investments in the form of shares are an exciting opportunity to set the course for tomorrow today. In this article, you will find out how you as a parent can invest cleverly and safely so that your offspring can get off to a carefree start later on.
We'll help you find the right investment for your child!
Why equity investments can make sense for children
Opening a savings book or call money account is still the classic way for parents and grandparents to make financial provisions for their children and grandchildren. They are considered safe - but unfortunately also low-yielding. However, many parents would like to take a more effective step: an investment that offers tangible long-term success.
Shares and ETF savings plans have long since become an important part of wealth planning for adults, as the need for private retirement provision is growing. It makes just as much sense for children to rely on these forms of investment with strategies such as a junior custody account - because by starting at a young age, even small amounts can grow into a solid financial cushion over the years thanks to the compound interest effect.
Later, usually when the youngsters reach the age of majority, the children can then enter adulthood with a helpful cash cushion: a start-up aid that is becoming increasingly important in the modern world.
Equity investments offer the chance of attractive returns and provide the opportunity to save up early for important savings goals such as a car, driving license, studies or a first home. They can help parents to provide their children with the financial resources that will give them a degree of freedom and security later on.
Especially in times of low interest rates and rising living costs, it is worth developing an investment strategy at an early stage that goes beyond traditional savings products and focuses on solid long-term values. If you are still a little unsure about investing in shares and what you should look out for specifically for your children, the following chapters will help you.
The custody account: your access to the stock market for your children
To invest in shares for your child, you need a securities account. It is your key to the stock market: you can buy, hold and manage shares, funds or ETFs via the securities account. But where is the best place to open a securities account and which form suits your needs and goals?
Where can I get a deposit?
There are various providers and ways to open a custody account:
- Banks and direct banks
Many branch banks and direct banks offer custody accounts for children or families. They score points with personal advice and often a wide range of financial products such as savings plans or funds.
- Online broker
Those who prefer to take care of their investments themselves will usually find favorable conditions and simple operation via app or web portal with online brokers. These providers focus on self-management - ideal for parents who want to actively engage with the topic.
- Asset managers and fund providers
Some parents prefer professional support. In this case, financial managers or fund providers take over the selection of securities and the adjustment of the investment strategy. This can be a particularly convenient solution for funds or actively managed savings plans.
💡 TipPassive savings plans are convenient, but not always the best choice. Make sure that the provider offers flexible solutions that suit you and bring the best possible return - so you can invest in an optimized and individual way for your child. For example, it's helpful if you can adjust or pause the savings rate at any time so that you can react to changes in your family's life.
Which type of custody account is the right one?
Once you have decided on a provider, the question remains as to whether you want to open the custody account in your child's name or your own. Both options have their own special features.
- A junior custody account is opened directly in the child's name. It also legally belongs to your child, although you as the parent have full power of disposal until the child reaches the age of majority. You can control purchases, sales and reallocations independently at any time. An important advantage is the possibility of using tax-free allowances such as your child's saver's allowance.
However, this means that your child has sole power of disposal over the deposit from their 18th birthday. This causes uncertainty for some parents for uncertaintywhether the money will actually be used as originally intended.
- Alternatively, you can open a custody account in your name in your name. This offers you maximum flexibility, as you can access the money at any time - even after your child's 18th birthday.
In this case, however, the money also counts as your assets for tax purposes, which means that the child's tax-free allowances no longer apply.
At Invest4Kids, we combine the advantages of both approaches: Our solution offers you full control, maximum flexibility and the opportunity to take advantage of tax benefits. Thanks to a well thought-out contract design with our right of determination, you as a parent remain in a position to control the investment strategy for your child even after their 18th birthday.
Tips for choosing the right custody account
A custody account is the heart of your investment - it determines how flexibly and efficiently you can invest for your child. That's why it's important to us that you take a close look when making your choice and carefully compare the various offers.
To help you make the right decision, we have compiled the most important criteria for choosing a custody account for you:
- Deposit form
Consider whether you want to open a junior custody account or a custody account in your own name. A junior custody account offers tax advantages for your child, while with a parent custody account you retain full control even after their 18th birthday. Our model cleverly combines these advantages: You benefit from tax advantages and at the same time retain control of the investment - even after your child reaches the age of majority.
- Cost structure
Pay attention to a transparent cost structure. Custody account management fees, order costs and possible administration costs should be fair and comprehensible so that as much of your money as possible actually flows into the investment.
- Flexibility
A custody account should allow you to adjust your savings rate at any time, take a break or make additional one-off payments - depending on how it suits your life.
- Range of financial instruments
ETFs, funds or individual shares - your custody account should give you the opportunity to implement the investment strategy that suits you best.
- Service and advice
Parents in particular who still feel uncertain benefit from a partner who can provide them with individual advice and help them find the right investment strategy.
At Invest4Kids, we attach great importance to ensuring that your custody account not only works technically flawlessly, but also offers you the necessary security and flexibility. With our combination of personal advice, flexible deposit options and professional management, you are ideally positioned to build a successful investment for your child - today and tomorrow.
We'll help you find the right investment for your child!
✅ ø€25,703 more per child with our modern ETF strategy
✅ Find the perfect ETF investment for your child in a 30-minute video conference from the comfort of your own home
✅ Sit back and watch your child's wealth grow - our experts will take care of the rest
Which forms of investment you can use
Today, parents have three basic ways of investing capital for their children on the stock market. Each method brings its own opportunities - and risks that only become apparent over the years.
1. manually managed portfolio
A classic custody account with a bank or online broker initially looks attractive: you buy or sell ETFs and individual shares whenever you think it suits you. This gives you maximum freedom of choice, but this is precisely where the pitfalls lie.
- Tax brake on reallocations
Every time you change the strategy - for example from MSCI World to a new allocation - capital gains tax is immediately incurred and reduces the compound interest effect.
- Cost veil
Order fees, spreads, up-front fees and custody account fees can easily add up to four figures over 18 years. Many parents only realize this when they see the final total.
- Loss of control from 18
In the case of a children's custody account, it belongs to them in full when they reach the age of majority. From this point on, parents can no longer control whether the capital remains invested for the long term or is spent spontaneously.
A purely manual custody account is therefore only suitable to a limited extent for families who want to invest tax-efficiently in the long term and secure access at the same time.
2. passive savings plan
The ETF savings plan automates the purchase of index funds: a fixed amount flows into the same ETF month after month. This reduces fluctuations and keeps the entry costs low. However, this model also has its limits:
- Taxes for adjustments
As long as the plan remains unchanged, it is favorable. However, if you want to adjust the allocation after a few years or add defensive components, you will have to sell again - and capital gains tax will be due, just like in the manual custody account.
- Fee risks over time
Many ETF providers or brokers increase management or order fees in the medium term. With a plan that is intended to run for 15-18 years, such changes can have a significant negative impact on your return.
- No built-in safeguard clause
If the legislator changes the tax rules, new levies have an immediate impact - there is no buffer or guarantee.
The savings plan is therefore a solid foundation if everything remains as it is today. However, if market conditions or personal goals change, it quickly becomes inflexible.
3. flexible alternatives - the children's investments from Invest4Kids
Our approach combines the broadly diversified ETFs of a savings plan with the advantages of an insurance wrapper. This allows us to elegantly solve typical portfolio problems:
- Tax-free reallocations
Internal rebalancing or strategy changes remain completely tax-free; income continues to grow unchecked.
- Parental control thanks to the right of determination
Even after their 18th birthday, you decide when and for what purpose the capital is paid out - your child cannot squander it prematurely.
- Half-income method for later
If payment is made after the child reaches the age of 62, only 50% of the gains are taxable.
- Condition assurance & cost transparency
Contractually fixed fees protect against subsequent price increases; there are no custody or transaction costs.
- Individual advice & flexible savings rates
Our experts adjust the portfolio on an ongoing basis and allow for breaks, increases or one-off payments - so your pension remains predictable, even if your life circumstances change.
A manually managed custody account and a passive ETF savings plan can be convincing with low entry costs, but reach their limits as soon as taxes, fee changes or the 18th birthday come into play. Our children's investments at Invest4Kids minimize these risks, retain parental control and at the same time take advantage of the return opportunities offered by international markets - a well thought-out solution for parents who focus on long-term planning and tax efficiency.
Which asset classes are suitable for a children's portfolio?
After the "how" comes the "what": which securities or tangible assets can your child's money flow into? Here is a compact overview of common asset classes, their special features and their typical place in a long-term portfolio.
| Attachment | Core idea | Opportunities / added value | Typical risks | Role in the children's portfolio |
| Shares | Direct interest in a company | High growth opportunities, dividends | Price fluctuations of individual companies | Building block for returns; should be broadly diversified |
| ETFs | Passive fund basket, tracks an index | Cost-effective diversification across many shares | Market sometimes moves sideways / downwards | Basic framework for long-term wealth accumulation |
| Actively managed funds | Fund manager actively selects securities | Opportunity for outperformance, flexible allocation | Higher fees, managers can make mistakes | Supplement if targeted market ideas are to be introduced |
| Raw materials | Tangible asset, often via ETCs or funds | Inflation protection, low correlation to equities | Strong price fluctuations, no current income | Small admixture possible to cushion fluctuations |
| Currencies | Relies on exchange rate fluctuations | Diversification, partial inflation protection | Very volatile, dependent on interest rate policy | Only for advanced strategies - marginal at most |
| Crypto | Digital scarcity (e.g. Bitcoin) | High return potential, innovation aspect | Extremely volatile, regulatory uncertainty | Maximum speculative admixture in very small doses |
As a rule of thumb, you can remember this: The younger the child and the longer the horizon, the higher the proportion of equities and ETFs should be; more speculative components should only be included in small doses, if at all.
Markets with high volatility on the stock exchange are less suitable for children's investments. Here, the focus is more on rapid and high market fluctuations, which can quickly increase the amount of money invested, but can also radically reduce it. As an investor, you need a good understanding of the stock market as well as a lot of attention and regular adjustments.
The great advantage of investments for children - the long period of time over which profits are accumulated - can best be exploited with secure forms of investment that ensure comparatively slow but steady returns. This is what makes investments such as ETFs so attractive for people with long-term savings goals, whether for their own retirement or as a custody account for children and grandchildren taken out at birth.
Conclusion: start early, stay smart
If you invest regularly today, your child will take full advantage of the long investment horizon and benefit from the compound interest effect when saving. A broadly diversified foundation of ETFs provides stability, targeted building blocks such as active funds or individual shares set growth accents, while tangible assets offer additional buffers. Make sure to keep taxes and fees as low as possible and to ensure control even after your 18th birthday.
With a flexible, tax-optimized solution such as the Invest4Kids concept, you combine potential returns, planning security and parental freedom - the best basis for financial freedom.
Frequently asked questions about shares for children (FAQ)
At what age is it worthwhile for my child to invest in shares?
An investment can make sense from birth because a long investment horizon smoothes out price fluctuations and makes optimum use of the compound interest effect.
How high should the monthly savings rate be?
Many families choose 50 to 100 euros per month, but the most important thing is that you pay in regularly; we can add larger one-off amounts at any time.
What risks do I need to consider?
Stock markets fluctuate in the short term, so money should remain invested for at least ten years and ideally flow into broadly diversified ETFs to cushion fluctuations in individual stocks.
What happens to the custody account when my child comes of age?
With a classic junior custody account, your child is given sole power of disposal on their 18th birthday, while an ETF insurance policy from Invest4Kids gives parents control thanks to their contractual right of determination.
Can I access the capital in the event of unforeseen events?
In most custody accounts, you can arrange partial sales at any time, and our flexible insurance solution also allows you to pause contributions without incurring tax disadvantages.
Do I have to pay taxes during the term?
Income above the saver's lump sum of currently EUR 1,000 per person is subject to tax; within the Invest4Kids insurance, however, tax is only incurred when the policy is paid out at a later date.
Is a one-off investment better than a savings plan?
A savings plan spreads the entry risk evenly over time and ensures discipline, while an additional one-off amount can accelerate the accumulation of assets - in practice, the two often complement each other well.
We'll help you find the right investment for your child!
✅ ø€25,703 more per child, thanks to our modern ETF strategy
✅ The perfect ETF investment for your child in a 30-minute video conference from the comfort of your own home
✅ Sit back and watch your child's wealth grow - our experts will take care of the rest
