Many grandparents want to give their grandchildren something to take with them - not only in the form of memories, but also financially. Whether it's education, university or their first home, a financial cushion can offer their offspring a great deal of freedom and security.
But in times of low interest rates and rising living costs, the question arises: which investment really makes sense for grandchildren? While the classic savings account used to be a popular choice, there are now much better alternatives for investing money for grandchildren each month.
This article shows you what options are available, what you should look out for and how you can ensure that your savings are really used sustainably for the future.
We'll help you find the right investment for your child!
- An additional $25,703 per child, thanks to 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 assets grow – our experts will take care of the rest.
Financial security instead of cash gifts: saving sustainably for grandchildren
Whether for a birth, first day at school or at Christmas: Gifts of money from grandparents are not uncommon. Perhaps it ends up in a pretty envelope with a loving card or is paid directly into a savings account. But what happens afterwards? The money is often spent on toys, clothes or the next leisure activity - things that bring joy in the short term but do not create any lasting value.
Instead, this money can also be used as a real jump-start for the future - in the form of a targeted investment for grandchildren. Because instead of a one-off amount that is quickly used up, regular saving for grandchildren builds up solid assets over the years.
💡 A n example:
Instead of giving your grandchild €300 every year, you could put this money into a smart investment. With a moderate return of 6% p.a., you could save more than €9,500 over 18 years - enough for a driving license or to furnish your first home.
However, not every form of savings is suitable. An important issue is the availability of the money: who should have access to the savings, the parents, the grandparents or the child themselves? There are crucial differences here, which we will shed light on in the next chapter.
Important aspects of investing for grandchildren: taxes, availability & control
Just putting money aside? That doesn't make sense when it comes to saving for grandchildren. Instead, it is important to find the most lucrative and flexible form of investment for your own needs. The way in which the savings are managed plays an important role here. Who gets to decide? The grandparents, the parents or the grandchild themselves? And what tax aspects should be taken into account?
Tax advantages when investing for grandchildren
Many parents and grandparents are unaware that children have their own tax-free allowances that can be used to keep investment income tax-free. For example, interest or profits from fund investments can remain tax-free for this target group up to a certain amount.
Availability of money: who is in control?
Another aspect is the question of whose name the money is invested in. If the capital is invested directly in the child's name, the child's tax-free allowances can be optimally utilized. However, this usually also means that the child has full access to the savings at the age of 18.
Many grandparents want to ensure that their grandchildren use the money wisely - for example, for their studies, training or a major purchase later on. However, not every form of savings allows you to control access.
A junior custody account or child custody account is in the child's name so that the entire capital is freely available on their 18th birthday. In many cases, this is unproblematic - but what if the grandchild does not use the money for a long-term investment, but spends it on spontaneous consumer wishes?
There are also forms of investment such as the Invest4Kids concept, where parents or grandparents retain control of the capital for longer. These are particularly useful as the money can be earmarked for education, a future property or other major purchases.
Incidentally, in addition to financial provision, grandparents can also make legal arrangements for their grandchildren if necessary. For example, a power of attorney for children can ensure that important decisions can be made by the grandparents if the parents are not available.
An overview: What options are there for investing money for grandchildren?
There are many ways you can invest money for your grandchildren each month - but not every option is equally good. While savings accounts used to be the first choice, today there are more lucrative and flexible alternatives. But which one best suits your goals?
The classic savings book - a dying solution
You may remember it from your own childhood: the savings account was long considered the preferred way to invest money for grandchildren. However, there is now hardly any interest on them, so the capital tends to lose value due to inflation instead of growing.
Advantage: The money is available at all times.
Disadvantage: No return - and therefore no real wealth accumulation.
The Junior Depot - investing for the future
Another alternative is the junior custody account, which can be set up specifically for children and grandchildren. The money is invested in ETFs or equity funds in order to benefit from developments on the financial markets in the long term.
Advantage: High potential returns if the money remains invested for the long term.
Disadvantage: As soon as your grandchild turns 18, he or she will have full access to the custody account - even if the money was perhaps intended for other purposes.
ETF savings plans - smart wealth accumulation with a long-term perspective
An ETF savings plan is an attractive way to regularly invest smaller amounts in broadly diversified index funds. Even with small monthly savings amounts, you can build up a considerable sum over the years.
Advantage: Low costs, high flexibility and long-term growth potential.
Disadvantage: Here too, you lose control as soon as your grandchild comes of age.
The Invest4Kids concept: maximum security plus tax benefits
In addition to traditional custody accounts and savings plans, there are also insurance-based models that offer a mixture of returns, tax benefits and (grand)parental control . They allow you to save flexibly for your children - without the entire amount being paid out automatically at the age of 18.
A particularly clever solution is Invest4Kids, which was specially developed for parents and grandparents who want to make sustainable provisions for their grandchildren. In contrast to a traditional junior custody account or ETF savings plan, Invest4Kids offers the advantage that you retain control over the capital and can make the most of tax advantages.
The problem with traditional forms of saving: Why the savings book has had its day
For decades, it was the standard solution for grandparents who wanted to save for their grandchildren: the classic savings account. Parents and grandparents often opened an account immediately after the birth, deposited money regularly and trusted that the savings would provide a sensible starting point until the child came of age.
But in times of zero interest rates and inflation, the savings account is no longer the solid investment it once was. Quite the opposite: money loses value over the years instead of growing.
Why the savings book is no longer up to date
1️⃣ Little or no interest - Savers used to be able to enjoy 3-5% interest per year. Today, the interest rate is often less than 0.5% - meaning that the capital earns virtually no interest.
2️⃣ Inflation eats away at savings - Even if you have €10,000 in your savings account, it will be worth significantly less in real terms in 18 years, as the cost of living is constantly rising.
3️⃣ No potential returns - Unlike modern investment solutions, a savings account does not benefit from economic growth or price increases.
💡 Conclusion: If you want to make long-term provisions for your grandchildren, you should look for modern alternatives. Today, there are much higher-yielding and more flexible financial products for building up assets for the future. One of these is the Junior Depot, which we take a closer look at in the next section.
Junior custody account or children's custody account: is it worth investing in shares?
More and more parents and grandparents are opting for the Junior Depot - a form of investment based on ETFs and shares specially designed for children - instead of the traditional savings account. But what exactly is behind it, and is this solution really the best choice?
How does a Junior Depot work?
A junior custody account is a securities account that is opened in the child's name. Parents or grandparents manage it until the child reaches the age of majority and can invest regular savings amounts - for example in ETFs or equity funds, which offer higher long-term returns than traditional savings products. Management is usually carried out via online banking so that deposits, changes or adjustments to the investment strategy can be made digitally.
Opportunities and risks: Are shares worthwhile for children?
✅ Higher potential returns than with savings accounts or fixed-term deposits
✅ Long-term growth thanks to the compound interest effect
✅ Flexibly adjustable savings rates
❌ No guaranteed profit - market fluctuations can result in losses
❌ Tax hurdles with high returns
❌ Full disposal by the child at the age of 18
The biggest disadvantage: as soon as the grandchild comes of age, he or she has free access to the entire capital - regardless of whether it is used for studies or a trip around the world. This is a risk for many grandparents, as they want to ensure that the money is really used for worthwhile purposes. If you want to retain more control over the capital and benefit from tax advantages, you should look for alternative solutions.
Alternative: Invest4Kids as a clever solution for grandchildren's pensions
While the savings account is hardly a sensible investment due to low interest rates, the Junior Depot offers the challenge that the child has unrestricted access to the entire capital at the age of 18.
If you are looking for a long-term, tax-optimized and controlled solution, Invest4Kids offers a clever alternative. It combines the best of both worlds: Opportunities for returns and tax advantages as with a junior custody account - but with the flexibility and security that parents and grandparents want.
A tip in passing: even the best investment is useless if an accident unexpectedly changes your child's life. Here we explain why accident insurance for children can make sense and how it can be combined with a sustainable financial strategy.
Invest4Kids vs. traditional forms of investment: A direct comparison
To make your decision easier, we have compared the three most common forms of investment for grandchildren. You can see at a glance which solution is best for you.
| Criterion | Invest4Kids | Junior Depot | Savings book |
|---|---|---|---|
| Potential returns | ✅ High - investing in funds & ETFs | ✅ High - Investment in ETFs/shares | ❌ Low - little or no interest |
| Tax advantages | ✅ Yes - tax-optimized growth, tax-free reallocations | ❌ No - capital gains are taxed annually | ❌ No - no tax optimization |
| Protection against inflation | ✅ Yes - long-term growth protects against loss of value | ✅ Partly - depending on market development | ❌ No - money loses value in real terms |
| Flexibility | ✅ Adjustable savings rates, tax-free reallocation | ❌ Rigid structure, direct tax deductions on sales | ❌ Limited deposits and availability |
| Access with 18 | ✅ Parents/grandparents retain control | ❌ Child can freely dispose of the money at 18 | ✅ Money remains available, but loses value |
| Intended use | ✅ Can be used for a specific purpose for training, studies or housing | ❌ No restrictions - child decides freely | ✅ Money can be used, but often loses value |
Why is Invest4Kids suitable for providing for grandchildren?
✅ Long-term planning security: unlike traditional custody accounts, the capital remains under parental or grandparental control even after the 18th birthday. This ensures that the money is actually used for sensible purposes - for example, for studying, training or your first home.
✅ Take advantage of tax benefits: Invest4Kids makes it possible to make optimum use of tax-free allowances and reinvest capital gains in a targeted manner - without direct tax deductions when reallocating or adjusting the strategy. This means: more net assets for your grandchild.
✅ Maximum flexibility: the savings rates can be adjusted, paused or increased at any time - exactly as it suits your financial situation. One-off payments are also possible, so you can add gifts of money from birthdays or special occasions directly to the savings plan, for example.
✅ Independent advice & tailored strategy: Invest4Kids does not offer a standard solution, but an investment strategy tailored to your individual needs. Funds and ETFs are specifically combined to ensure an ideal mix of stability, security and growth.
We'll help you find the right investment for your child!
- An additional $25,703 per child, thanks to 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 assets grow – our experts will take care of the rest.
Conclusion: Why Invest4Kids is the ideal solution for grandparents
With Invest4Kids, you combine the best elements of traditional savings forms and modern investments. You not only secure long-term growth and tax advantages for your grandchild, but also ensure that the money is really used for sensible purposes. Get advice from your personal contact now and find out how you can make the most of your grandchildren's pension.
Good to know: Those who start saving early benefit most from the compound interest effect - and thus ensure that their grandchild has a strong financial start to the future.
