In brief:<\/strong><\/p>\n We\u2019ve all seen the picture: the lovingly filled piggy bank in the child\u2019s bedroom, fed with coins from Grandma and Grandad. It\u2019s a lovely idea for children to save, but in times of low interest rates and rising inflation<\/strong>, the traditional piggy bank is no longer nearly enough to secure the little ones\u2019 financial future in the long term.<\/p>\n\n\n\n Investing for your child is more important today than ever before and offers the chance to give your children a decisive head start in adult life<\/strong>.<\/p>\n\n\n\n Parents who start investing for their child early on can make a big difference even with small sums<\/strong>: whether it\u2019s funding a driving licence, a degree abroad or even their first home at a young age, setting up a investment account for children can pay off in the long term.<\/p>\n\n\n\n The reason for this is the compound interest effect<\/strong><\/a>, which is often described as the eighth wonder of the world. Parents who start investing for their children early on benefit from the power of this effect over the decades and can thus turn small amounts into a considerable fortune.<\/p>\n\n\n\n Good to know:<\/strong><\/p>\n The compound interest effect refers to the process whereby interest that has already accrued is added to the principal and, in subsequent periods, generates interest of its own, resulting in exponential growth of the principal. Initially, the effect appears small, but over time the growth accelerates sharply; time is therefore the most important factor.<\/p> \n<\/div><\/div><\/div>\n\n\n\n In the following sections, we\u2019ll look at the best ways to invest child benefit, from savings plans for children to savings accounts for children, and highlight which providers offer the most attractive options.<\/p>\n\n\n\n <\/p>\n\n\n\n Before you start investing for your child, you should clarify these 5 important questions in advance to ensure you find the right investment strategy:<\/p>\n\n\n\n First of all, let\u2019s consider the question of the investment horizon<\/strong>: how long can the money remain invested? As mentioned above, a long-term investment horizon<\/strong> is worthwhile due to the effect of compound interest. The sooner you set up a savings plan for your children, the more grateful they\u2019ll be to you later on.<\/p>\n\n\n\n It is therefore advisable to set up a investment account for children as soon as they are born. For a newborn, an investment horizon of 15 to 20 years would therefore be realistic. Over this period, market fluctuations can usually be weathered without any problems.<\/p>\n\n\n\n Next, the question of the investment objective<\/strong> should be clarified. What will the capital be used for later on? Is it for their education, a driving licence, or perhaps even their first home? The more precisely this objective is defined, the easier it is to determine the appropriate asset allocation.<\/p>\n\n\n\n Another important point to consider with any investment is your risk tolerance<\/strong>. If you wish to set up an investment account for children, you should be aware of the level of risk that you \u2013 and, later on, your child \u2013 are willing to take. This is because, even during periods of significant volatility, you should continue to invest with discipline and avoid selling out of panic.<\/p>\n\n\n\n You should also clarify in advance the amount of the investments and the frequency of the contributions<\/strong>. A one-off investment, or perhaps a savings plan for children? The following chart from Vanguard shows that regular contributions certainly pay off in the long term.<\/p>\n\n\n\n As you are investing on behalf of someone else \u2013 your child \u2013 rather than for yourself, you should clarify the legal structure<\/strong> in advance. Is the money held in your child\u2019s name or in yours? And who has the right to access it?<\/p>\n\n\n\n By answering these questions, you\u2019ll provide clarity for yourself and your loved ones and avoid potential conflicts in the future.<\/p>\n\n\n\n There are several ways to invest money for your children. However, not every option is truly attractive when you take inflation, costs and potential returns<\/strong> into account.<\/p>\n\n\n\n That\u2019s why it\u2019s worth comparing the most common options in more detail, rather than relying solely on supposedly \u2018safe\u2019 traditional choices. Below, we look at three forms of investment<\/a> that are particularly popular for children:<\/p>\n\n\n\n In doing so, we examine not only the typical expected returns and the respective risks, but also the cost structure of the individual options.<\/p>\n\n\n\n This is because fees and inflation, in particular, have a decisive influence on how much of the money saved actually remains in the end.<\/p>\n\n\n\n <\/p>\n\n\n\n In Germany, both the savings book and the instant-access current account remain among the most popular forms of investment<\/strong> when parents want to save for their children.<\/p>\n\n\n\n One reason for this is certainly the simplicity of the products<\/strong>. They are easy to understand and the capital is available at any time.<\/p>\n\n\n\n However, neither savings accounts nor instant-access current accounts are attractive forms of investment. The problem is that interest rates are often significantly below the rate of inflation<\/strong>, which means that the money invested effectively loses purchasing power.<\/p>\n\n\n\n The following chart shows the trend in the average interest rate on savings deposits in Germany, from which it is immediately apparent that saving has become increasingly unattractive<\/strong> over the years.<\/p>\n\n\n\n For this reason, a savings account cannot be regarded as the best way to invest in children\u2019s benefits. Parents who are not only saving for their children but also wish to build up long-term wealth should therefore look for more attractive investment options.<\/p>\n\n\n\n Savings plans for children are becoming increasingly popular. They are among the most effective methods<\/strong> for systematically building up wealth for oneself and one\u2019s children, which is why we are taking a closer look at this form of investment.<\/p>\n\n\n\n The way a savings plan works is simple: parents choose an amount to be invested monthly in selected investment vehicles. These usually include investing in ETFs<\/a>.<\/p>\n\n\n\n Advantages of savings plans for children:<\/strong><\/p>\n\n\n\n\n
Investing for your child: Why the days of the piggy bank are over<\/h2>\n\n\n\n
Want to save for your children? Clarify these 5 important questions first<\/h2>\n\n\n\n
\n
![\"\"](\"https:\/\/northern.finance\/wp-content\/uploads\/2026\/04\/Grafik-1-1.000E-Investition-in-den-FTSE-All-World-2-1024x569.png\")
<\/figure>\n\n\n\nInvesting for your child: What is the best investment for a child?<\/h2>\n\n\n\n
\n
Investing for Child 1: The savings book<\/h3>\n\n\n\n
![\"\"](\"https:\/\/northern.finance\/wp-content\/uploads\/2026\/04\/Grafik-2-13-1024x760.png\")
<\/figure>\n\n\n\nInvestment option for children 2: The savings plan<\/h3>\n\n\n\n
\n