Every month, €250 of Kindergeld lands in your account for each child. Most German families absorb it into the household budget, and nobody could blame them; nappies, shoes and school trips are real costs. But here is the number that changed how I think about child benefit: €250 a month, invested in a broad equity ETF for 18 years, has historically had a realistic chance of growing into roughly €90,000 to €110,000. Left in a savings account, the same money would likely end up around €60,000 to €65,000. The difference is a university degree, a flat deposit, or a decade of head start on investing.
The honest answer up front: you do not need to invest all of it, and most families should not. Even €50 or €100 a month, automatically, in one boring all-world ETF, builds something meaningful. The mechanics take about an hour to set up and cost close to nothing at the right broker. What matters far more than the amount is starting early, because an 18-year runway is the biggest advantage your child will ever have as an investor.
I cover this in detail in the Trade Republic ETF savings plan setup.
I will use Germany’s Kindergeld as the anchor because €250 per child per month is one of Europe’s most generous flat benefits, but the logic applies equally to Ireland’s Child Benefit, Austria’s Familienbeihilfe, Poland’s 800+ or the Dutch kinderbijslag. The maths does not care what the transfer is called.
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Over 18 years you would pay in €250 × 216 months = €54,000. That is the guaranteed part. What the market adds depends on returns nobody can promise, so treat every figure below as illustrative, not a forecast.
- Cautious, ~3% a year: roughly €71,000.
- Middle, ~5% a year: roughly €87,000, a reasonable planning assumption for a global equity ETF after costs.
- Optimistic, ~7% a year: roughly €108,000, in line with long-run nominal global equity returns, though 18-year windows have varied a lot around that average.
Compare that with a savings account. Even at a generous 2% deposit rate held for the whole period, €250 a month grows to only about €65,000, and much of that gain is eaten by inflation. The €20,000 to €40,000 gap comes almost entirely from compounding, not cleverness, and the principle is the same one I walk through in my beginner’s guide to ETFs.
One point people miss: because you are drip-feeding small amounts for 18 years, a crash in year three is actually helpful, since fifteen years of contributions then buy in at lower prices. The scary scenario is a crash in year 17, which is why I would shift a portion to safer assets a few years before the money is needed.
Child’s name or your name? The one decision that actually matters
The mechanics of buying an ETF are trivial. The real decision is whose name the account is in, because it changes taxes, control and entitlements.
Option 1: a Junior Depot in the child’s name
A Junior Depot is a custodial brokerage account legally owned by the child and managed by the parents until age 18. The big attraction in Germany is tax: the child is a taxpayer in their own right, with their own saver’s allowance (Sparer-Pauschbetrag, around €1,000 a year) and their own basic tax-free allowance (Grundfreibetrag, roughly €12,000; verify current figures). With a non-assessment certificate (Nichtveranlagungsbescheinigung) from the tax office, investment income within those limits flows entirely tax-free, so a €250-a-month portfolio would likely pay no tax for many years. I cover the German specifics, including which brokers offer free Junior Depots, in my guide to the best Junior Depot and ETF setup for kids in Germany.
The catch: the money legally belongs to the child. You cannot raid it for a family emergency without legal and tax complications, and at 18 your child gains full control, sensible or not. Larger balances can also matter for student support (BAföG) asset limits and, in some cases, the income limits for free family health insurance, so check those thresholds before the sums get big.
Option 2: investing in your own account, earmarked for the child
The alternative is to invest the benefit in your own depot, earmarked for the child. You keep full control forever: if the family needs the money, it is yours; if your 18-year-old is going through a questionable phase, you can wait. The trade-offs are that gains use your own tax allowance rather than the child’s, and gifting a large sum later can in theory touch gift-tax territory, though German parent-to-child allowances (€400,000 per parent per 10 years) make this rarely a practical problem.
| Feature | Junior Depot (child’s name) | Parent’s own account |
|---|---|---|
| Legal owner | The child, parents manage until 18 | The parent, indefinitely |
| Tax allowances used | Child’s own (often means zero tax for years) | Parent’s, often already used up |
| Access in a family emergency | Restricted, money must serve the child | Full and immediate |
| Control at age 18 | Transfers fully to the child | Stays with you, gift when ready |
| BAföG / benefit thresholds | Counts as the child’s assets | Does not count as the child’s assets |
| Teaching value | High, the child sees their own portfolio grow | Lower, it is abstract until gifted |
Neither option is wrong. Tax efficiency favours the child’s name; flexibility favours yours. Plenty of families split the difference, which is what I would do. Outside Germany the same custodial-versus-parental question exists under different names, and I have mapped the country-by-country options in my overview of custodial investment accounts for kids in Europe.
The setup: one accumulating all-world ETF and a free savings plan
This is deliberately boring. For an 18-year horizon on a child’s behalf, I would not pick themes, sectors or single countries. One accumulating all-world UCITS ETF gives you several thousand companies across developed and emerging markets, automatic dividend reinvestment, and nothing to rebalance. Total expense ratios on the big all-world funds now sit around 0.07% to 0.22% a year; you can line the candidates up with my UCITS ETF comparison tool and check current TERs on the provider factsheets before you commit.
Then automate it. Most German neobrokers and several pan-European brokers run ETF savings plans (Sparpläne) from as little as €1 a month with zero execution fees, and many offer the Junior Depot variant free of account charges too. Set the plan to pull the day after Kindergeld arrives, and the decision is made once instead of 216 times. My comparison of the best brokers for ETF savings plans in Europe covers who charges what.
Why accumulating rather than distributing? Fewer taxable events to administer for a minor, no dividend cash sitting idle, one less thing to manage. In Germany the annual Vorabpauschale on accumulating funds still uses up some of the child’s tax-free allowances each year anyway, which is a good question for a tax adviser once the portfolio passes five figures.
The honest objection: families actually need this money
Let me push back on my own headline. The €90,000-plus figure assumes you invest the entire benefit for 18 years and never touch it. For most households that is fantasy. Kindergeld exists to offset the cost of raising children, and for many families it does exactly that, every month, with nothing left over.
So do not frame this as all or nothing. The maths scales linearly: €100 a month at the middle 5% scenario is roughly €35,000 at 18; even €50 a month is around €17,000. Either beats the €0 that comes from waiting until you can afford the full amount. Start with whatever slice survives contact with your actual budget and increase it later. A savings plan can be paused in two clicks; an 18-year head start cannot be bought back. And keep a proper cash emergency fund first: money you might need within five years does not belong in an equity ETF, whoever’s name is on the account.
What happens at 18, and how to prepare for it
If you chose a Junior Depot, the account converts to a normal depot on the child’s 18th birthday and they gain full control. Some parents find this terrifying. My view: the risk is real but manageable, and preparation is the point. A child who has watched their own portfolio ride two or three corrections over a decade is far less likely to liquidate it for a car than one handed a surprise five-figure sum.
Three things are worth planning ahead. If the money has a defined purpose with a known date, such as university at 19, gradually shift part of the portfolio toward short-term bonds or cash from around age 15. Check the BAföG asset limits if German student aid may be relevant, because the child’s own depot counts against them. And involve the child: show them the statements, explain what they own, and let the account be the financial education most schools never provide.
Not in Germany? The same logic with different numbers
Ireland pays €140 per child per month, Austria’s Familienbeihilfe ranges roughly from €140 to over €200 depending on age, Poland’s 800+ pays 800 złoty (about €185), and the Netherlands pays kinderbijslag quarterly at age-dependent rates. The amounts differ; the principle does not. Eligibility rules and amounts change, so verify current figures with your national family-benefits authority; in Germany that is the Familienkasse, and the official rules are published on the Bundesagentur für Arbeit’s Kindergeld pages.
What I’d do
If I were a German parent starting today: open a free Junior Depot at a broker with zero-fee savings plans, set up a €125 monthly Sparplan into one accumulating all-world UCITS ETF, and apply for the child’s non-assessment certificate so gains compound tax-free. Keep the other €125 of Kindergeld in the household budget without guilt. If flexibility worries you more than tax, run the same plan in your own depot and gift the shares later. If money is tight, do €50 and move on with your life; the habit matters more than the amount. It is unglamorous, nearly free to run, and in 18 years it is very likely to be the best financial decision you made on your child’s behalf.
Your country’s share: the free EU dividend tax calculator by country shows what a distribution is worth after domestic tax, from Germany’s Sparer-Pauschbetrag to Ireland’s 38%.
Frequently asked questions
Q: Is it legal to invest Kindergeld instead of spending it on the child?
A: Yes. Kindergeld is paid to the parent to offset the costs of raising a child, and there is no rule dictating how you allocate it month to month. Investing part of it for the child’s future is entirely legitimate, and if you invest inside a Junior Depot the money legally becomes the child’s anyway.
Q: How much could €250 a month realistically become in 18 years?
A: You would contribute €54,000 in total. At an illustrative 5% annual return that grows to roughly €87,000, and at 7% roughly €108,000, while a 2% savings account would reach only about €65,000. These are historical-style scenarios, not guarantees, and real 18-year outcomes have varied widely around those averages.
Q: Should the account be in my name or my child’s name?
A: The child’s name (Junior Depot) is usually more tax-efficient in Germany because the child has their own saver’s allowance and basic tax-free allowance, often meaning zero tax for years. Your own name preserves flexibility and control past age 18. Many families split contributions between both to get some of each benefit.
Q: Which ETF is best for a child’s long-term portfolio?
A: For an 18-year horizon, a single accumulating all-world UCITS ETF is hard to beat: broad diversification across thousands of companies, automatic dividend reinvestment and low costs of roughly 0.07% to 0.22% a year. Avoid themes and single sectors; the goal is to own the market, not to pick winners. Verify current TERs on the provider’s official factsheet before buying.
Q: What happens to a Junior Depot when my child turns 18?
A: The account converts to a standard depot and your child gains full legal control of the money; you cannot prevent this. Prepare by involving the child in the portfolio for years beforehand, and if the money has a fixed near-term purpose, consider de-risking part of it from around age 15. Also check BAföG asset limits, since the depot counts as the child’s own assets.
Q: We cannot afford to invest the full child benefit. Is a small amount still worth it?
A: Absolutely. The maths scales down cleanly: about €100 a month at 5% is roughly €35,000 after 18 years, and even €50 a month reaches around €17,000. A small automated savings plan you actually sustain beats a large one you cancel after six months, and most brokers let you pause or adjust it at any time without cost.
This guide is part of our hub on investing a windfall, inheritance or payout — browse the full cluster for related situations.
European UCITS/ETF investor with 11+ years building a global dividend and index portfolio, and founder of Financial Expert Class. I write every guide here from first-hand experience investing across EU brokers and tax regimes — not theory. More about me →