Opening a Brokerage Account for Your Grandchildren: How to Lay the Foundation for Your Grandchildren's Future Today
Opening a Brokerage Account for Your Grandchildren: How to Lay the Foundation for Your Grandchildren's Future Today
When a grandchild is born, a new chapter begins for many grandparents. They want not only to give their grandchildren love and time, but also to lay a financial foundation for their future. In the past, the traditional savings account was the go-to choice for grandparents, but in an era of low interest rates, this model has become obsolete. Anyone who wants to seriously provide for their grandchild today cannot ignore the capital markets. Opening a brokerage account for a grandchild is now the most effective way to build long-term wealth.
In this guide, you’ll learn everything you need to know about the Junior Depot. We’ll explain the legal requirements, highlight the tax benefits, and compare the best providers for a children’s investment account. You’ll also learn why an ETF savings plan is often a smarter choice than a savings account and how you can achieve big results with small amounts.
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Opening a Brokerage Account for Your Grandchildren: Legal Basics
A junior brokerage account is a securities account held in the child’s name and managed by the parents. It’s ideal for an investment intended to last for many years or even decades. Legally speaking, the assets in the account belong to the child from the very beginning. For you as a grandparent, this means you’re giving your grandchild money that they’ll have at their free disposal once they reach the age of majority—that is, on their 18th birthday.
Until the child reaches the age of majority, the Junior Brokerage Account is managed by the parents or legal guardians. This is an important point to keep in mind. As a rule, you cannot open a securities account for a grandchild on your own. Since minors do not yet have full legal capacity, their legal guardians must sign the application. The account is held in the child’s name, but the parents oversee the transactions.
Tip: Discuss your plans with your grandchild’s parents well in advance. Opening a junior brokerage account involves more steps than opening your own account because the legal guardians—the parents—are involved; it’s important for the family to coordinate well.
Junior Investment Account Comparison: Where's the Best Place to Put Your Grandchildren's Money?
There is a wide range of options on the market. Many established banks, such as ING, Comdirect, and Sparkasse, offer specialized solutions for junior brokerage accounts. Modern brokers have also recognized the potential in this area. However, a comparison of junior brokerage accounts reveals significant differences in account maintenance costs and fees for savings plans. Fortunately, many providers now offer free account management, which is especially important for small savings amounts.
Here's an overview of some of the best providers of junior brokerage accounts:
- Scalable Capital: The Scalable Kids' Portfolio provides access to over 2,800 ETFs and 3,000 stocks with no execution fees.
- Trade Republic: Trade Republic's Kids' Account offers over 2,700 ETFs that can be purchased for free as part of a savings plan and more than 3,400 stock savings plans. The intuitive app makes managing the account very easy for parents and grandparents.
- Finanzen.net Zero: This brokerage account provides access to over 1,700 ETFs that can be purchased through a savings plan at no cost and nearly 8,000 stock savings plans. There are often no order fees.
- ING: ING's Junior Brokerage Account offers free account management and a minimum investment of just €1 for over 1,100 ETFs. This is an excellent way for grandparents to get started if they want to begin with small amounts.
- Consorsbank: Consorsbank charges a 1.5% fee for stock savings plans in the Junior Depot, while more than 1,900 ETFs can be purchased for a savings plan without an order fee.
Note: The minimum savings amount for many Junior Accounts is just €1, which makes it possible to save regularly even with very small amounts. This way, Grandpa and Grandma can make a valuable contribution even with a small amount of money.
Open a Junior Investment Account: A Step-by-Step Guide to Your First Investment
Once you’ve decided on a brokerage account, it’s time to take action. The account is typically opened online. However, since the child does not yet have an ID card (or the ID card is not sufficient for identification), additional documents are required.
To open a Junior brokerage account, you usually need:
- A copy of the child's birth certificate.
- The identification documents of the legal representatives.
- The child's tax identification number.
The parents’ identity is usually verified through the PostIdent process or via video identification. Since PostIdent requires a trip to a post office branch, many people today prefer the digital solution they can use from home. Once all documents have been reviewed, the account is activated. From that point on, grandparents, godparents, and parents can begin investing money in the form of savings plans or one-time investments for the little ones’ future.
Step by Step to Your First Investment
Step 1: Select a provider
Compare the terms and conditions of different providers. Pay attention to factors such as account maintenance fees, savings plan fees, and the selection of funds or ETFs.
Step 2: Fill out the online application
Fill out the online application from the provider you've chosen. You'll need the child's tax ID to do this.
Step 3: Perform identification
Verify your identity using the Postident or Video-Ident process.
Step 4: Submit Documents
Submit the required documents to the provider. A copy of the child's birth certificate is usually required.
Step 5: Set up a savings plan
Select the funds or ETFs you want and set up your investment plan.
Building a Large Fortune with Small Amounts: The Power of Compound Interest
Many grandparents think they need to have a huge amount of money to open an investment account for their grandchildren. The opposite is true. It pays to start saving early, since even small amounts can grow into a substantial sum over time. The reason for this is the power of compound interest. If you start right after the child is born, the money has 18 years or more to work for itself.
By making regular savings contributions—for example, through an ETF savings plan—you can accumulate a substantial amount over the years. A ETF (Exchange-Traded Fund) It is cost-effective and particularly well-suited for building long-term wealth for children. It invests in a broadly diversified portfolio across entire markets, which significantly reduces risk compared to individual stocks.
A sample calculation: If you invest just 25 euros a month for your grandchild and we assume an average return of 7% on the stock market, you’ll have accumulated over 10,000 euros after 18 years. Of that amount, only 5,400 euros are your own contributions—the rest is profit from the investment’s growth.
Making Smart Use of Tax Benefits with a Junior Investment Account
A key reason for opening a brokerage account in the child’s name is the tax situation. Children can benefit from tax-free allowances that exempt investment income from taxation. The assets in the junior investment account are treated as separate from the grandparents’ assets for tax purposes. This means that the income earned in the grandchild’s investment account does not count toward your own tax-free allowance.
Tax exemptions apply to children just as they do to adults:
- The standard deduction for savers: This amount is €1,000 per year. It is deducted directly when calculating income.
- The basic exemption: It currently stands at up to €12,348 (as of 2026). If the child has no other income, earnings up to this amount remain tax-free.
If the €1,000 standard savings allowance is not sufficient, you can apply for a non-assessment certificate (NV certificate) from the tax office. By making full use of these allowances, you can take advantage of tax benefits when using a children’s investment account.
A brokerage account in the child's name vs. in your own name: an important decision
Grandparents often face the question: Should I invest the money in the child's name or in my own name? This decision has far-reaching tax and legal consequences.
Investment account in the child's name (Junior Account):
- ✔ Full utilization of the child's tax-exempt allowances.
- ✔ Legally, the money belongs to the grandchild and is protected in the event of the grandparents' bankruptcy.
- ❗ Parents, as legal guardians, must give their consent.
- ❗ At age 18, the child has full access to the money.
Investment in your own name:
- ✔ A securities account in your own name gives you full control over your assets until they are actually transferred.
- ✔ No parental consent required.
- ❗ The earnings are counted toward your personal savings allowance.
- ❗ In the event of death, the securities account becomes part of the estate, which can lead to disputes.
Grandparents can give each grandchild up to €200,000 tax-free every 10 years. This provides plenty of flexibility for larger monetary gifts to celebrate a birth or special milestones in life.
ETF Savings Plan: Why Global ETFs Are Ideal for Grandchildren
For long-term savings goals, such as funding an education or college, ETF savings plans based on global equity ETFs are particularly useful. These products are low-cost and broadly diversified. Instead of betting on individual companies, your grandchild is investing in thousands of companies worldwide.
An ETF savings plan allows you to invest monthly in the stocks of a specific index (such as the MSCI World). This type of investment is ideal for building long-term wealth for children because it simply weather market fluctuations over the decades. Compared to a savings account, which loses real value due to inflation, stock ETFs offer the potential for real returns.
Tip: Many family members can pool their resources. Godparents, uncles, and aunts can work together to build up a child’s savings through cash gifts and regular contributions. Saving together as a family also helps children develop an understanding of money and learn to handle it responsibly from an early age.
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The Role of Parents and the Management of the Investment Account
As we have already learned, parents are responsible for managing the Junior Account until the child reaches the age of majority. This is a matter of trust. The funds in the account may not be used for the parents’ personal expenses. The money belongs to the child and must be invested for the child’s benefit.
Grandparents should find out about the next steps involved in transferring the investment account no later than their grandchild’s 18th birthday. At the same time, it’s a good idea to introduce the grandchild to the topic of investing early on. Those who understand how a brokerage account works and how assets grow over the years often develop a better understanding of long-term wealth accumulation. As a result, the money saved is viewed more as a valuable foundation for the future than as a means to fulfill short-term spending desires.
Important to know: The child will have unrestricted access to the assets in the Junior Depot once he or she turns 18. The parents will then lose all rights of access.
The Invest4Kids Concept: An Alternative for Maximum Control
But what if, as a grandparent, you’re concerned that your grandchild won’t have the necessary maturity on their 18th birthday to handle 20,000 euros or more responsibly? That’s where our special concept comes in. A traditional junior brokerage account at a bank offers numerous advantages, but it’s subject to a clear legal rule: Once the child reaches the age of majority, ownership of the account automatically transfers to them. At Invest4Kids, we combine the benefits of stock ETFs with a structure that allows you (or the parents) to retain control. We guarantee you the right to make decisions that extends beyond your 18th birthday. This way, you can ensure that the savings are actually used for college, vocational training, or a first apartment—and don’t disappear into impulsive spending during a phase of recklessness.
In addition, our model offers additional tax advantages when reallocating funds. In a standard brokerage account, every sale triggers a tax liability if the tax-free allowances are exceeded. With us, your capital continues to grow tax-free as long as it remains in the contract.
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Conclusion: Lay the Foundation for Success Now
Opening a savings account for your grandchildren is one of the best ways today to build long-term financial security for the next generation. You can make the most of the power of compound interest and benefit from tax advantages through the saver’s allowance and the child’s basic tax exemption. Even though the process of opening the account is a bit more involved—since the parents must be involved as legal guardians—the effort pays off over the decades.
Whether you choose a traditional junior brokerage account at ING or a modern brokerage account at Trade Republic—the important thing is to get started. Cash gifts received for a birth, Christmas, or a birthday are much better off in an ETF savings plan than in a savings account or under your pillow.
If you want to ensure that your assets remain protected even after your grandchild turns 18 and you’d like to retain control, let us advise you. We’ll help you find the best savings plan for your grandchildren so that your contribution truly pays off.
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Frequently Asked Questions About Opening a Brokerage Account for Grandchildren
The following provides concise answers to the most frequently asked questions on this topic.
- As a grandmother, can I open a brokerage account for my grandchild without the parents' consent?
- No, with traditional banks and brokers, this is not legally possible. As legal guardians, the parents must sign the application and verify their identity using the PostIdent procedure or Video-Ident.
- What is a reasonable amount to set aside for a savings plan?
- Thanks to the low minimum savings amounts offered by providers like ING or Scalable, you can start with as little as 1 euro per month. Grandparents typically set aside between 25 and 50 euros per month.
- What happens if I can no longer afford the savings contribution?
- An ETF savings plan is flexible. You can adjust or increase your payments at any time, or even pause them entirely. There’s no obligation to continue making payments for the entire term.
- Aren't ETFs too risky for children?
- It’s true that stocks are subject to fluctuations. However, since the investment horizon for grandchildren is usually more than 15 years, market downturns have consistently been offset over time. Historically speaking, the risk of a loss on the stock market is virtually zero when holding stocks for more than 15 years.
