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Saving for children: How parents properly invest money for children

Image source: © Adobe Stock / Text: Verivox

the essentials in brief

  • The money that children save themselves to finance larger purchases is best invested as overnight money.
  • When saving for several years to a big goal with a fixed date – such as a moped or a driver’s license – time deposits are the right investment for children and young people.
  • Large monetary gifts are best invested by parents in a mix of time deposits and high-yielding investments such as stocks or funds. Cheap index funds (ETFs) are particularly suitable.
  • If grandparents, godparents or the parents themselves regularly save money for children, a fund savings plan is particularly suitable.
  • Low costs, more returns – pay attention to favorable conditions when choosing your financial products and your securities account.

+++ This guide is updated regularly. The following information corresponds to the current status in October 2019. Subsequent developments have not yet been taken into account +++

Many parents regularly put some money back for their children. Grandparents, aunts and uncles or the godfathers also often contribute to the wealth accumulation of a child with larger monetary gifts. Parents are therefore faced with the question of which investment is particularly suitable for children. Those who pay attention to high interest rates and an attractive return get more out of the money saved. The savings book should have been used as the sole facility. Interest rates there are usually lower than inflation. So the rising prices eat up part of the money. We explain what you should pay attention to when saving for children and how you can introduce your children to responsible use of money.

Christina Cherry
Invest money for children: savings book or shares?

Invest money for children: savings book or shares?

Parents usually start looking for investment opportunities for their offspring after the birth of their child. Up to the age of majority, a child costs around 125,000 euros according to our calculation. After graduating from school, you have to finance your studies or training as well as your first home and car. In times of low interest rates, it is not easy to find the right form of investment.

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Savings accounts generate little return

Parents or grandparents should start saving early enough to give the children the necessary financial support. In addition, the investment for children must be as safe as possible. The still popular savings accounts fall under the statutory deposit guarantee scheme, but only achieve low returns. The money saved usually loses real value. For this reason, investment opportunities that involve a certain risk but generate significantly higher returns should also be considered. With a mix of high-return and low-risk investments, the children’s financial future can be better secured. Sufficient risk diversification is recommended to protect against losses. For research, we recommend independent and reputable sources such as www.gevestor.de, www.finanztip.de or also www.handelsblatt.com. Receiving valuable information makes it much easier for children to make the right investment. Traditional investment options include fixed or overnight accounts. Before a certain amount is paid in monthly, you should look for an offer with good interest rates. However, an investment in call money accounts is not really worthwhile even in this low interest rate phase. Interest rates quickly drop to below 0.5%.

Christina Cherry

Investing money for children: the top 5 ways to save

Do you want to invest money for your children? Excellent! The best options Invest money for your children, In this article we summarize briefly and crisply for you.

Some banks offer extra options and products especially for children on. Of course, you should use this, because you get extra conditions, premiums and grants from the state for the investment of your children.

We show you which investment is best for your children and what you should pay attention to if you want to invest money for your children.

Christina Cherry