🧠 Which investment is best for your child?

Not the advice you'd expect

Author

Nessrine Slimani
January 22, 2026

Children are expensive, no one disputes that.

The declining birth rate across Europe, driven largely by financial concerns like housing costs and economic insecurity, speaks volumes.

So when you have children, you often wonder what you can do to help them in life, to prepare them for those moments when they'll need to fly on their own.

For many, this means investing in activities that build them up: sports, summer camps, travel, creative pursuits. Things that develop their confidence, autonomy, and openness to the world.

All of which comes at a cost. Several hundred euros a month, easily.

At the same time, you'll often hear that you should also be saving for them. Building up a pot so they have options at 18-25: funding their education, getting on the property ladder, launching a business.

But both cost money, and sometimes you have to choose.

  • Do I save these €100 for them later, or spend them on their development now?

  • Am I neglecting their financial security if I don't save?

After all, financial capital gives them options when they start adult life. And human capital helps them develop skills, confidence, and autonomy. The tools to seize those options.

So how do you strike the balance?

The two capitals reinforce each other

The ideal scenario is a child who has both human capital AND financial capital.

Economist Gary Becker (Nobel Prize 1992) described human capital as the knowledge, skills, and abilities that increase a person's capacity to create value. Beyond qualifications, it's also those inner resources that help you navigate life.

In practical terms, this means someone who has self-confidence, who can bounce back when things don't go to plan, who has relationships and solid friendships. Someone autonomous who can figure things out. Someone who has the inner resources to navigate life, adapt, and make choices that make sense to them.

Financial capital, meanwhile, gives them options and breathing room: enough to fund their studies away from home, launch a project close to their heart, or survive a few months without income while they find their path.

If I'm emphasising this point, it's because I see so many parents getting caught up over tax wrappers, where to invest, how much to put in, which ETF to choose.

Financial capital offers options, but human capital enables your child to develop skills and create value for themselves.

Human capital is the engine. Financial capital is the fuel.

The challenge lies in the balance : how to build both in parallel.

How to approach it

1. Set a destination

The first question that usually comes up is:
Where should I invest? Which account should I use? 

But that's not the most relevant starting point.
The real question is: What exactly is the goal?

Because if you don't know why you're saving, how much you're aiming for, and for when, you can't know whether you're putting enough aside, too much, or choosing the right tools.

  • Do you want to help fund their university fees? Help them get on the property ladder? Give them a safety net at 20?

  • €5,000? €10,000? €30,000?

  • By the time they're 18, 20, or 25?

These answers change everything because they determine how much you put aside regularly and what allocation you can afford.

A word of caution: be careful not to be so ambitious that you put yourself at risk. Wanting to give your child as much as possible while neglecting your own pension is like having a sword hanging over your head. A parent who becomes financially dependent on their children at 70 is a delicate situation to navigate, even when family ties are strong.

2. How much do other parents save?

To give you a realistic benchmark, here's what other UK parents are doing.

A Flagstone study (May 2025, 2,000 parents) found the most common savings band is £5,000 to £10,000 (21.3% of parents), while 10% exceed £40,000. The national average is £18,200, skewed by higher earners.

In France, according to Ined (2025), the average savings per child is €1,300 (ages 0-17), rising to €2,300 for teenagers in two-parent households. The top 10% exceed €6,000, often via savings accounts.

These figures aren't targets. Just a sense of perspective.

3. Can you afford to take risks?

If you have 15 years or more, yes.

Diversified equity ETFs are volatile short-term, but historical data consistently shows that over 15-20 years, they significantly outperform risk-free assets. That's largely because you have time to absorb crises.

However, the closer you get to your deadline, the more you need to secure your pot. That's why setting a deadline is so important: it lets you anticipate and begin de-risking.

For more on how to do this, a previous edition covers it in depth.

4. Keep it in my name or put it in theirs?

As Shani Jayamanne, Director Investment Specialist at Morningstar Australia, notes in this article, putting money directly in a minor's name means that at 18, they gain full control and can do what they like with it.

At 18, people don't always have the maturity or perspective to manage significant capital, especially if they've never been involved in building it.

If you keep the savings in your name with the intention of transferring it later, you can adapt the timing based on their maturity and circumstances. Perhaps they'll be readier at 25, or perhaps you'd prefer to pass it on gradually so they learn to manage it gently. The only downside is that it's fiscally your asset, so you'll be taxed on gains according to the wrapper you choose or your marginal tax rate.

5. Should you make a gift?

Here you need to check the gifting rules in your country of tax residence, as they can make a real difference.

In France, for example, you can gift up to €100,000 per parent every 15 years without paying gift tax, and if there are two parents, that rises to €200,000 in total per child.

In Germany, for gifts to children (Class I), the allowance is €400,000 every 10 years (e.g., family property).

6. Watch the fees

One area where you need to be uncompromising: transaction fees.

As Shani Jayamanne highlights in her article, on small amounts fees can literally devour your savings efforts. If you're putting in €50 a month and each contribution costs you €2 in fees, you're losing 4% of your capital before it even starts working, and over 18 years that can represent up to 20% of your final pot.

So you absolutely must prioritise zero-fee solutions: free regular contributions, brokers offering commission-free ETF purchases, or contribute less frequently but in larger amounts (e.g., quarterly) to spread fixed costs.

7. Provide financial education

Progressively passing on financial education to your child is also a way of building their human capital.

You can start quite early with simple things like managing pocket money, birthday money, discussing prices when you're out shopping together. Over time, you can give them more responsibility: a budget to organise a playdate at home, for example. As your child matures, you can introduce slightly more advanced concepts, drawing on current events or companies they know.

The goal is that once they're a young adult, they already have the foundations to manage that money thoughtfully and responsibly.

The two capitals together, human and financial, best prepare them to launch into life and seize the opportunities that will come their way.

I hope today's edition has been useful to the parents reading this.

Take care,
Nessrine

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Articles, research, and studies consulted for this edition:

Important reminder: This content is for educational purposes only, not investment advice. Do your own research before making any decisions. And remember that all investments, including ETFs, carry risks of capital loss.

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