Secure your child's future with a customized savings plan from Invest4Kids
Most parents worry about their children’s financial future. After all, they want to not only instill values and provide an education, but also lay a solid financial foundation—whether for college, vocational training, or their first home. But how can you invest money for your children in a way that ensures it grows not only safely but also profitably?
In the past, a savings account was the go-to choice: parents or grandparents would regularly set money aside to give their child a good start in life later on. But these days, the traditional savings account has had its day: interest rates are so low that savings often lose value due to inflation. Many people are therefore looking for better alternatives to build a financial foundation for their children in the long term.
One option that is becoming increasingly popular is what are known as children’s savings plans. These allow parents to invest money systematically over a longer period of time without having to actively manage the investment on an ongoing basis. In particular, ETF Savings Plans for Children are an interesting option because they can offer attractive returns over the long term. But how exactly does this type of investment work? What alternatives are there, and what should parents look out for?
In this article, you’ll learn which savings options are truly beneficial for children, how to make the most of the power of compound interest for your child, and why investing with Invest4Kids is a particularly smart choice.
We'll help you find the right investment for your child!
What savings options are available for children?
The range of savings plans for children is vast and confusing—and not every option is equally good. While some parents still rely on savings accounts, others are already turning to higher-yield alternatives like ETF savings plans. Let’s start by taking a look at the most common options:
1. Savings account – the old-fashioned way
🔹 Advantage: Safe, readily available
🔹 Disadvantage: Little or no interest, loss of value due to inflation
For a long time, the savings account was considered a classic investment option for children. It’s safe, easy to manage, and the money is available at any time. However, due to extremely low interest rates, this type of investment is hardly worth it anymore—in the long run, the savings actually lose value.
2. Money market account – flexible, but with little return
🔹 Advantage: Higher interest rates than a savings account, accessible at any time
🔹 Disadvantage: Interest rates are often variable, low returns
A money market account offers slightly higher interest rates than a savings account, but the returns are still far below those achievable through an ETF savings plan for children or a tax-optimized insurance plan. It may be an option for short-term savings—but not really for long-term wealth accumulation.
3. Home savings plan – a smart choice for future real estate plans
🔹 Advantage: Government subsidies available, long-term planning
🔹 Disadvantage: Inflexible, often lower returns than ETF savings plans
A home savings plan can be worthwhile if it’s clear that the child intends to buy an apartment or a house in the future. However, this type of savings plan is quite inflexible and usually offers lower returns than alternative savings plans for children.
4. ETF Savings Plan – Potential for High Long-Term Returns
🔹 Advantage: Attractive returns, long-term wealth accumulation
🔹 Disadvantage: Fluctuations in value; capital losses are possible in the short term
An ETF savings plan for children is a modern way to save specifically and for the long term for your children. Thanks to broad diversification across stock markets, attractive returns can be achieved—though there are also fluctuations that can lead to short-term losses in value.
5. Invest4Kids – the smart alternative that gives you full control
🔹 Advantage: Parents retain control over the funds
🔹 Advantage: No hidden costs, tax benefits, customizable
Strictly speaking, Invest4Kids doesn't offer parents a traditional children's savings plan, but rather a tax-optimized insurance solution, which works like a children’s savings plan—but with key advantages. An investment made through Invest4Kids combines the benefits of a traditional ETF savings plan with an additional security feature: parents retain control over the invested capital, even after the child reaches the age of majority. They also benefit from tax advantages and a flexible structure that can be adapted to their life circumstances at any time.
The Power of Compound Interest: Why Time Is the Most Important Factor in Saving
One of the biggest advantages of starting to save early is the so-called compound interest effect. This principle ensures that even small amounts of savings can grow into substantial sums over a long period of time—provided the money is invested regularly and the returns are reinvested.
How does the compound interest effect work?
Simply put: The earlier parents start saving for their children, the more their capital benefits from growth. The returns on the investment are not paid out but are automatically reinvested, allowing them to grow further.
🔹 Sample calculation:
Suppose parents invest 100 euros each month in a children’s savings plan for their child starting at birth, with an average annual return of 6%.
- After 10 years: approx. 16,500 euros
- After 18 years: approximately 38,000 euros
- After 25 years: approximately 72,000 euros
The key point: The longer the money remains invested, the more the power of compound interest comes into play. Starting later cannot fully make up for this advantage. That’s why it pays to start early!
ETF savings plans for children, in particular, make the most of the power of compound interest because they invest in a broadly diversified portfolio across the stock market. But there’s a catch: once the child turns 18, parents no longer have any say over the funds. That’s why it’s important to choose a savings plan that allows them to remain involved in decision-making over the long term—such as the Invest4Kids investment plan.
Setting the Right Savings Goal: How Much Money Will a Child Really Need Later On?
This is a question that many parents ask themselves: How much should I save each month for my child? The answer depends on your individual savings goals. Will the savings be used later for college, your first apartment, or a driver's license?
We’ve put together some guidelines to help you determine what amounts might be appropriate in the long term:
| Sparziel | Benötigte Summe |
|---|---|
| Führerschein | 2.000–3.000 € |
| Studium/Ausbildung | 10.000–20.000 € |
| Erste eigene Wohnung | 10.000–30.000 € |
| Startkapital für später | 50.000 € + |
What is a realistic savings rate?
The good news is that parents don’t have to make large payments right away to achieve these goals. Even small amounts can grow significantly over time—provided they are invested wisely.
🔹 Example:
- 50 euros per month over 18 years → approx. 19,000 euros
- 100 euros per month over 18 years → approx. 38,000 euros
- 200 euros per month over 18 years → approx. 76,000 euros
Saving for Children: Take Advantage of Child Benefits!
Many parents use their child benefit to cover day-to-day expenses—but it can be worth investing a portion of it for the long term. Even just 100 euros a month from your child benefit can add up to a significant amount over time. 💡 Tip: Learn more in our article Investing child support.
We'll help you find the right investment for your child!
- €25,703 more per child, thanks to our modern ETF strategy
- Find the perfect ETF investment for your child in a 30-minute video call from the comfort of your own home
- Sit back and watch your child’s wealth grow—our experts will take care of the rest
ETF Savings Plan or Investing with Invest4Kids: What’s the Difference?
An ETF savings plan for kids is considered a solid choice—but here’s an insider tip: there’s an even better alternative! Unlike traditional ETF investments, the Invest4Kids investment strategy offers a key advantage that many parents often overlook without professional advice: You retain control over the funds—even after your child turns 18.
A traditional ETF savings plan is typically opened in the child’s name. This means that as soon as the child turns 18, they have full access to the entire savings balance. Parents then no longer have any say in what happens to the money. A carefully planned savings goal for college or a home of their own can then quickly be spent on impulse purchases.
A children’s savings plan with Invest4Kids solves this problem. With this plan, the parents retain control over the funds, even after the child turns 18. This means you can ensure that the money saved is used for meaningful purposes, such as vocational training, college, or getting a driver’s license. At the same time, you benefit from tax advantages, flexible savings rates, and a professional, personal advisor who tailors the investment to your family’s needs. So why just save when you can invest wisely?
An Overview of the Benefits of the Invest4Kids Children's Savings Plan
- Tax benefits: The returns can be reinvested tax-free.
- Flexibility: You can adjust or pause your savings rate at any time.
- No unwanted expenses: Parents retain control over the funds until the child is financially independent.
How does the Invest4Kids children's savings plan work?
The Invest4Kids children's savings plan combines the benefits of an ETF savings plan with a parent-controlled and tax-optimized investment.
Here's how it works:
- Parents or grandparents set up a children's savings plan.
- The money is invested in a customized mix of mutual funds and ETFs.
- You can adjust your savings rate flexibly, depending on your financial situation.
- Parents retain the right to decide how the capital is used—even after their child turns 18.
- The facility is professionally managed and regularly optimized.
By the way: Many grandparents want to support their grandchildren financially—the Invest4Kids children’s savings plan is a great option for this as well. You can learn more about it in the article Invest money for the grandchildren every month.
FAQ: Frequently Asked Questions About the Children's Savings Plan
What is a children's savings plan?
A children's savings plan is a long-term investment in which parents or grandparents regularly set aside money for their child. The money is invested over an extended period—for example, in ETFs or mutual funds—and can later be used for education, college, or a child's first home. Thanks to the power of compound interest, the savings grow over time, so that even small monthly contributions can add up to a substantial amount.
What is the difference between an ETF savings plan and a children's savings plan?
An ETF savings plan is typically opened in the child’s name. This means that the child has full access to the funds starting on their 18th birthday. With the Invest4Kids concept, parents retain control, ensuring that the capital can be used for specific, meaningful purposes.
How much should you save each month for a child?
That depends on your individual savings goal. Many parents set aside between 50 and 200 euros per month. Thanks to the power of compound interest, even a small monthly savings amount can grow into a substantial sum over the years.
Is investing with Invest4Kids safe?
Yes, with the Invest4Kids children’s savings plan, your money is invested across a wide range of ETFs and mutual funds to ensure solid long-term growth. Plus, there are no hidden fees or unexpected costs—transparency is our top priority.
Can grandparents or other relatives invest money on behalf of the child?
Yes, grandparents can also use a children’s savings plan to set aside money for their grandchildren each month. This is a great way to provide for the child’s future in the long term.
Bottom line: Start a children’s savings plan now and build wealth over the long term
Many parents want to give their children the best possible financial foundation for the future. However, traditional savings methods like savings accounts or money market accounts offer little to no return—and a children’s investment account can turn into a financial trap on their 18th birthday if the money is spent recklessly.
A children’s savings plan with Invest4Kids offers the ideal solution:
✅ You retain control over the funds—even after your child turns 18.
✅ Tax benefits ensure that more of your savings remain intact.
✅ Flexible savings contributions that adapt to your family’s financial situation.
✅ Professional guidance and an optimized investment strategy for long-term wealth accumulation.
So if you start investing for your child early on, you can make the most of the power of compound interest and lay a solid financial foundation for their big goals in life. If you have any questions or would like personalized advice, the experts at Invest4Kids are here to help.
We'll help you find the right investment for your child!
- €25,703 more per child, thanks to our modern ETF strategy
- Find the perfect ETF investment for your child in a 30-minute video call from the comfort of your own home
- Sit back and watch your child’s wealth grow—our experts will take care of the rest
