Many parents want to put something aside for their child early on: for a driving licence, training, university or moving into a first flat. A classic savings account hardly earns anything for that anymore. More and more families in Germany therefore open a child investment account (Kinderdepot) and set up an ETF savings plan in it. This guide explains how such an account works, what small amounts can grow into, how tax works and which pitfalls you should know about.
Want to see your own numbers straight away? With the Child Investment Account Calculator you set age, monthly savings and return and instantly see the account value, the tax and all warnings.
What is a child investment account?
A child investment account, often called a junior account, is a normal securities account. The difference: it is in the child's name. The parents open and manage it as legal representatives. With joint custody, both parents usually have to agree. To open one you normally need the birth certificate and the child's tax identification number.
The legal core matters: the money in the account belongs to the child. Every deposit is a gift to the child. Parents may only use the money in the child's interest, not for their own purposes. On the 18th birthday full control passes to the child.
Why an ETF savings plan?
An ETF (exchange traded fund) is a fund that tracks an index, for example a global equity index with several thousand companies. Even a small amount is spread across many firms and countries. Ongoing costs for broad index ETFs are usually only 0.1 to 0.3 % a year.
A savings plan automatically buys shares for a fixed amount every month. Many providers allow savings plans from 1 to 25 € a month. The big advantage with a child is time: starting at birth gives 18 years until the 18th birthday. Over such long periods, stock market swings have historically evened out far better than over two or three years.
What 25, 50 or 100 € a month can grow into
The table shows a savings plan from birth to the 18th birthday. Assumption: 6 % return a year and 0.2 % ongoing costs. This is a model calculation, not a guarantee.
| Monthly | Paid in | Value at 18 | of which growth |
|---|---|---|---|
| 25 € | 5,400 € | 9,337 € | 3,937 € |
| 50 € | 10,800 € | 18,675 € | 7,875 € |
| 100 € | 21,600 € | 37,349 € | 15,749 € |
| 150 € | 32,400 € | 56,024 € | 23,624 € |
Almost half of the final amount comes from compound growth. That is exactly why an early start pays off: starting only at age 6 with 50 € a month gives about 10,268 € at 18 – around 8,400 € less than starting at birth.
Returns fluctuate. At 4 % instead of 6 %, 50 € a month would grow to about 15,369 €; at 8 %, to about 22,815 €. The calculator shows you this range for your own numbers.
Tax: why the child's account often stays tax-free
This is the biggest advantage over an account in the parents' name. For tax purposes a child is a separate person with their own allowances:
- Saver's allowance: 1,000 € of capital income per year is tax-free for every person, even a baby.
- Basic allowance: in 2026, 12,348 € of income per year stays tax-free. If the child has no other income, this also applies to capital income.
- Special expenses allowance: another 36 €.
Together, up to 13,384 € of capital income per year stays tax-free. So that the bank deducts no tax at all, you apply to the tax office for a non-assessment certificate (NV-Bescheinigung). Up to 1,000 €, a simple exemption order at the bank is enough. For equity ETFs the partial exemption applies on top: only 70 % of the returns are taxable at all.
For comparison: if the same 50 € a month sits in the parents' account and their saver's allowance is already used by their own investments, around 1,454 € of tax is due by the 18th birthday. In the child's account it is 0 €. Read more in the article Child Investment Account and Tax.
Child's account and Early-Start Pension: two separate pots
From 2027 there is also meant to be the Early-Start Pension (Frühstart-Rente). The state would then pay 10 € a month for every child from age 6 to 18 into a separate retirement account. The law has not been passed yet: the Bundestag debated the draft in first reading on 25 September 2026. Birth years 2020 and 2021 are to start first; younger children join at age 6.
The difference to the child's account is large: Early-Start Pension money is locked until retirement and can generally only be paid out from 65. The child's account, by contrast, is freely available. The two complement each other: the child's account for training and the start into adult life, the Early-Start Pension for old age. At around 6 % return, the state's 1,440 € can grow to a good 35,000 € by age 67. The Early-Start Pension Calculator shows the details.
The pitfalls
A child's account does not only have advantages. You should know three points in advance:
- From 18 the child decides alone. Parents cannot prevent the money being spent on something other than planned.
- Family health insurance: children covered by family insurance may have at most 565 € of total income a month in 2026. Capital income after the allowance counts. Selling a large account completely in one year can push the child above the limit.
- Student aid (BAföG): BAföG counts the student's own assets. Under 30, 15,000 € are exempt; anything above is counted.
How to avoid these issues is covered in the article Child Account Pitfalls.
Who can pay in?
Not only parents. Grandparents, godparents or relatives can pay into the child's account too. That is handy for money gifts at birthdays or Christmas. In the calculator you can enter such gifts as a yearly amount. Example: 50 € a month plus 300 € of gifts a year gives about 27,773 € after 18 years.
Gift tax hardly matters here: each parent can give a child 400,000 € tax-free every ten years, grandparents 200,000 €.
How to start in five steps
- Set a goal: what should the money pay for later, and roughly how much do you want to reach?
- Use the calculator to find out which monthly amount you need.
- Compare provider costs: account fees, savings plan fees and the ETF's ongoing costs.
- Open the account in the child's name and set up the savings plan.
- Submit an exemption order, and later, with higher returns, a non-assessment certificate.
Conclusion
A child investment account with an ETF savings plan is, for many families, the simplest way to build wealth for their child over a long time. The child's own allowances usually make it completely tax-free. In return, the money belongs to the child irrevocably. If you plan this consciously and keep an eye on the limits for health insurance and student aid, there is little you can do wrong. The examples are model calculations, not investment advice.