Many grandparents want to support their grandchildren financially. But what is the best way to save money for grandchildren today? In this guide we explain simple strategies for long-term savings. Read more.
Written by Erol Eren, Founder and Managing Director, B.Sc. Economics ·
For many grandparents, saving for grandchildren is about much more than money.
It is an expression of care and the desire to give the next generation better opportunities.
Many grandparents say: “I had it easier. I want my grandchild to have a better start in life.”
The reality today is that education, housing and the cost of living are increasing in many countries - including Germany. A financial cushion can help children later when they face important life steps.
Saving for grandchildren is therefore not just about money.
It is about:
creating opportunities
providing security
thinking long term
Many grandparents traditionally save for their grandchildren by using:
savings accounts
day-to-day savings accounts
cash gifts for birthdays or holidays
These options feel safe and familiar. However, over long periods they often have one major disadvantage: returns are usually very low, while inflation reduces the purchasing power of money.
This means that money sitting in a savings account for many years may lose part of its real value over time. The problem is therefore not saving itself - but that the money is often not working for the child.
One of the greatest advantages when saving for grandchildren is time.
A newborn child often has 15 to 20 years before the money is needed - for example for:
education or university
a driver's license
the first apartment
financial independence
This long time horizon allows families to use long-term investment strategies.
Successful long-term saving usually includes:
small but regular contributions
a long investment horizon
a structured and automated approach
This is not about speculation. It is about patience, consistency and long-term thinking.
One increasingly popular option is saving through ETF savings plans.
ETFs (Exchange Traded Funds) allow investors to invest broadly across many companies around the world. This means families can participate in the long-term growth of the global economy.
An ETF savings plan for grandchildren works very simply:
a fixed amount is invested each month
the investment is broadly diversified
the savings plan runs automatically over time
For many grandparents this approach is attractive because it is:
transparent
long-term oriented
easy to understand
You can learn more about this in our article about ETF savings plans for children.
Savings books and cash gifts feel safe — but inflation quietly eats along. Grandparents who really want to provide invest small amounts regularly: even €50 a month can grow into tens of thousands of euros over 18 years. The most important step: talk to the parents — who manages it, in whose name, available when?
Many grandparents ask: “How much should I save for my grandchild?”
The good news is that large amounts are not necessary. Even small monthly contributions can grow significantly over time.
Typical amounts include:
25€ per month
50€ per month
100€ per month
Through the compound interest effect, these contributions can grow into a substantial amount over many years.
You can see examples of how these savings grow in our article:
How much should you save monthly for your child?
Many grandparents want to help their grandchildren while also respecting the parents’ financial planning.
For this reason, saving for grandchildren works best when it is coordinated with the parents.
Important questions may include:
Should the investment be in the child’s name?
Who manages the investment account?
When should the money become available?
Open communication creates trust and avoids misunderstandings.
When saving for grandchildren, the following are not the most important factors:
the perfect timing
the perfect product
the largest amount of money
More important are:
starting early
thinking long term
choosing simple structures
Every euro saved today is ultimately a sign of belief in a grandchild’s future.
Many grandparents ask which options exist for long-term savings. There are several approaches, each with different levels of flexibility, control and return potential.
These traditional saving options are familiar to many grandparents. They are generally safe, but currently offer very low interest rates.
Over long periods of 15 to 20 years, inflation can significantly reduce the real value of the money.
This means the savings may lose purchasing power over time.
A modern alternative is an ETF savings plan. With this strategy, money is invested regularly into globally diversified index funds that track many companies worldwide.
This approach offers:
participation in global economic growth
broad diversification
automated investments
We explain this in more detail in the article:
ETF Portfolio for Children: Example Savings Plan
Grandparents do not need to be financial experts to make a meaningful contribution to their grandchildren’s future.
It is far more important to understand a few basic principles and choose a long-term strategy that fits the family.
If you would like to explore the topic in more detail, you may also find our guide helpful:
Saving for Children in Germany: The Complete Guide
A common question when saving for grandchildren is whether the money should be invested in the child’s name or in the name of the parents or grandparents.
Both options have advantages and disadvantages.
If the investment is made in the child’s name, the money legally belongs to the child.
Possible advantages include:
using the child’s tax allowances
building long-term wealth directly for the child
However, one important aspect must be considered:
Once the child reaches the age of 18, they usually gain full access to the money.
We explain the tax rules for children’s investments in more detail in our article:
Taxes on Children’s Investments in Germany
Some families decide to keep the investments under the parents’ or grandparents’ name.
The advantage is that the family retains more control over when and how the money is used.
This can be particularly helpful when larger amounts are involved.
Watch video content about this topic!
Visit our InstagramMany grandparents underestimate how powerful small monthly contributions can become over many years.
For example:
If 50€ per month is invested for a grandchild, the investment could grow to tens of thousands of euros over 18 years depending on market development.
Even small amounts can later help with:
university or education
a driver's license
the first apartment
financial independence
You can see detailed examples in our article:
Example Portfolio for Long-Term Wealth Building
Many grandparents begin saving shortly after a grandchild is born. The advantage is the long investment horizon. The earlier you start, the stronger the compound interest effect becomes.
Yes. Many savings plans allow regular contributions from parents or grandparents. Alternatively, some grandparents choose to contribute larger amounts for birthdays or holidays.
If the investment is held in the child’s name, the money legally belongs to the child. At age 18, they usually gain full access to the account. For this reason it is important to think about the investment structure early.
Two routes, one timeline: when does control over the money pass to your child?
Can you say today whether your child will be ready at 18 to decide alone about a five-figure sum?
A junior account, a savings book or a deposit registered to the child
Turning 18 is fixed in law. Nothing here can be moved.
The date is set by law — not by you.
The contract is in your name — the money is meant for your child
From 18 you can hand over — but you do not have to. The moment stays your decision.
You can change the date later at any time. You keep the decision — for as long as you want.
This is not distrust towards your own child. It is the recognition that maturity is not a date.
Child benefit arrives every month anyway. The only question is what becomes of it.
Wie viele Kinder?
| Kindergeld im Monat | 259 € |
| In 18 Jahren ausgezahlt | 55.944 € |
| Davon angelegt statt ausgegeben | 118.514 € |
Niemand muss das ganze Kindergeld anlegen. Aber die Rechnung zeigt, was in einer Zahlung steckt, die ohnehin jeden Monat kommt.
Child benefit at current rates. Investment calculated at 9.7 % gross return after all costs over 18 years — an illustrative model, not a forecast. The 9.7 % is the long-run average return of the MSCI World, as Finanztip reports it for long investment horizons. Past performance is not a reliable indicator of future results.
Conclusion
Whether through small monthly contributions or occasional gifts, the key is to start early and think long term. Ultimately, saving for grandchildren is not only about money – it is about creating opportunities. And sometimes the most important step is not choosing the perfect product, but starting the conversation.
Many families only realize during a conversation that it is not individual savings plans that matter most, but the overall financial structure of the family.
If you would like to understand how a long-term savings strategy for your grandchild could work, an independent consultation with ETF4Kids can help.
Check your family financial structure
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