At €50 a month from birth to the eighteenth birthday, investing delivers €5,927 more than a savings account. At €100 a month that gap is €11,854.
That's not a small margin. It's nearly double what you contributed, purely from the choice between two accounts.
Eighteen years is an unusually long horizon for most financial decisions, and that's precisely why this choice carries so much weight.
The difference over eighteen years
At a savings rate below inflation, common in recent years, against an invested amount at 4% real:
| Contribution per month | Total contributed | Savings account (real) | Invested (real) | Difference |
|---|---|---|---|---|
| €25 | €5,400 | €4,953 | €7,916 | €2,963 |
| €50 | €10,800 | €9,905 | €15,832 | €5,927 |
| €100 | €21,600 | €19,811 | €31,664 | €11,854 |
Look at the savings column. At €50 a month over eighteen years, you get out less in purchasing power than you put in. That isn't a calculation error; it's what a negative real return does over a long period.
Why saving for children so often goes wrong
Children's savings accounts often carry a slightly higher rate than ordinary ones, and that feels like a good choice. The problem is that rate almost never exceeds inflation.
At 2% interest and 3% inflation, the real return is minus 0.97%. Across eighteen years that erodes a substantial share of purchasing power, and nobody notices, because the balance on screen keeps rising every year.
That's precisely the mechanism in the article on average savings, and it weighs heavier here than anywhere, because the period is so long.
Why starting early matters so much
The same €50 a month, different starting ages, all running to the eighteenth birthday:
| Starting at | Duration | Final amount | Contributed |
|---|---|---|---|
| Birth | 18 years | €15,832 | €10,800 |
| 6 years | 12 years | €9,253 | €7,200 |
| 12 years | 6 years | €4,075 | €3,600 |
| 15 years | 3 years | €1,915 | €1,800 |
Starting at birth delivers nearly double starting at six, with the same monthly contribution. That's the effect explained in the article on compound interest: time does most of the work, not the amount.
A one-off amount shows the same:
| Amount | At age | Value at 18 |
|---|---|---|
| €1,000 | Birth | €2,026 |
| €5,000 | Birth | €10,129 |
| €1,000 | 5 years | €1,665 |
Contributing five years earlier already saves €361 at €1,000 by the eighteenth birthday. With larger amounts, such as a gift from grandparents, that adds up quickly.
The practical risk most parents forget
Here sits a point absent from every comparison between saving and investing for children, and it has nothing to do with return.
Money in your child's name becomes your child's, full stop, from their eighteenth birthday. Regardless of what you intended it for, whether that was a degree, a car or a house deposit. Your child gains full control and can do whatever they want with it at that moment.
At €50 a month from birth, €15,832 sits freely available on the table on the eighteenth birthday. At €100 a month, €31,664.
That's no reason not to save or invest for your child. It's a reason to think in advance about the form. An account in your child's name grants that freedom completely; an account in your own name, with the money earmarked for your child, keeps you in control until you decide to hand it over.
Which form suits you depends on your trust in your child, your own discipline, and how important it is that the money becomes available at a specific moment.
Saving or investing: which fits when
Two considerations that decide it.
The horizon. A newborn gives you eighteen years. A fifteen-year-old gives you three. At a short horizon, investing backfires: the chance markets sit low right around the eighteenth birthday is real, and then you're selling at the worst moment. Rule of thumb: under a five-year horizon, saving is usually safer, even though it delivers less.
The goal. If the money is for a degree starting on a fixed date, you want certainty about the amount at that point. If it's a general wealth start with no fixed purpose, a longer horizon and therefore investing can deliver more.
A common approach: invest for the first ten to twelve years, then gradually shift to savings in the final years so the amount isn't exposed to a sudden fall right around the eighteenth birthday.
What waiting costs
One last calculation, because "I'll start later" is a common reason to do nothing.
Every year you delay starting costs you the return over the remaining years to the eighteenth birthday. At €50 a month, starting at birth versus a year later:
The difference between eighteen and seventeen years of contributions at €50 a month is roughly €900 in final value, for a decision you could arrange in an afternoon. Waiting therefore costs more with each passing year, not less, because the years missed sit at the start, where compounding has the longest to work.
How Gylder fits in
An account for your child is, for most parents, one more thing to track alongside their own wealth, and that's precisely where it slips out of view.
Gylder totals all your accounts daily, including ones you keep separate for a specific purpose. That way you see the account for your child alongside your own wealth, without logging into a separate bank to check how it's doing.
That's useful because an eighteen-year goal is easy to forget between your daily spending and your own retirement planning. One overview keeps it visible.
What this doesn't tell you
Tax rules aren't included. Wealth in a child's name has its own tax treatment, differing from wealth in your own name. That's tax territory and the rules change; look up the current treatment before opening an account.
The real return is an assumption. At 3% rather than 4% the amounts here are lower, and at a longer horizon that gap weighs more.
Every bank has its own terms. Some children's accounts have an age limit for withdrawal, others don't. Ask what's precisely arranged.
This isn't advice. Which form suits your family depends on your goal, your horizon and your trust in how the money will be used on the eighteenth birthday.
Frequently asked questions
Is saving or investing better for my child? At a long horizon, from birth to eighteen, investing delivers considerably more: at €50 a month, €5,927 more than saving. At a short horizon of a few years, saving is safer.
How much should I save for my child? That depends on your goal. For a study fund, work backward from the amount you want at eighteen; for a general wealth start, any amount you can structurally spare is a good beginning.
What happens to the money when my child turns eighteen? Money in your child's name becomes fully theirs, regardless of your own intention. To keep control yourself, hold it in your own name with your own label for your child.
Does it matter when I start? Considerably. Starting at birth delivers nearly double starting at six, at the same monthly contribution, purely from the extra years of compounding.
Should I invest everything until the eighteenth birthday? Not for most goals. A common approach is investing in the early years and gradually shifting to savings towards the end, so the amount isn't exposed to a sudden fall right before you need it.