Free custody account for children – a sensible investment in the future

A free custody account for children is an excellent way to start saving and investing for the future at an early age. Parents and grandparents can build up assets for their children and lay the foundations for financial security in adulthood. Especially in times of low interest rates and uncertain markets, the topic of long-term investments is becoming increasingly relevant. A custody account for children offers a flexible and uncomplicated way to benefit from the advantages of the capital market from a young age.

What is a custody account for children?

A custody account is an account in which securities such as shares, bonds, funds or ETFs (exchange-traded funds) are held. A custody account for children works in a similar way to a normal securities account, but it is specially tailored to the needs of minors. As children do not yet have full legal capacity, their parents or legal representatives can open the securities account in the child’s name. The custody account is then managed as a **minor’s custody account** and is used to invest money and increase capital.

A free custody account for children means that there are no custody account fees or costs for administration or transactions. Many banks and online brokers now offer such custody accounts to make it easier for young families to start investing. As a rule, there are also no account management fees, which makes it a particularly cost-effective way to build up assets.

Why open a custody account for children?

The decision to open a custody account for a child can make sense for various reasons:

Early asset accumulation: the earlier you start investing money, the more time the capital has to grow due to the so-called **interest effect**. A custody account for a child can be opened as early as infancy, which means that the money can work for the child for several decades.
Capital accumulation for later: The capital saved can later be used for various goals, such as education, buying a car, their first home or starting their own business. A well-managed portfolio can provide the child with a financial basis for the future.
Early understanding of finances: Children who come into contact with the topic of investing at an early age often develop a better understanding of financial relationships and the importance of long-term saving and investing. They learn how the capital market works and can understand the importance of patience and risk management.
Flexibility in the choice of investment strategies: A custody account for children makes it possible to invest in a variety of financial instruments. Especially **ETFs** and **funds** are popular with young investors, as they offer a broad diversification of investments and thus minimise risk. However, individual shares or bonds can also be included in the portfolio.

How do I open a custody account for my child?

Opening a custody account for a child is relatively simple and quick. Most banks and brokers offer special online forms for this purpose. The process is generally as follows:

Selecting the provider: There are many banks and online brokers that offer free custody accounts for children. It is important to choose a provider that does not charge high administration fees and offers a user-friendly platform. The selection of available securities and the quality of advice should also be taken into account.
Submit documents: To open a custody account, parents or legal guardians must usually submit their own identity card as well as the child’s birth certificate. In some cases, a registration certificate may also be required.
Opening a custody account and investing: Once the custody account has been opened, parents can decide which financial products they would like to invest in. Broadly diversified **ETFs** or **index funds** are generally suitable for long-term asset accumulation, as they offer a good opportunity to benefit from the growth of global markets.
Deposits and regular contributions: Depending on how much capital is available, parents can pay money into the custody account on a regular basis. Even small monthly amounts have a significant effect on overall assets over the years. The automatic nature of monthly savings plans is a popular way of investing regularly.

What are the advantages of a free custody account for children?

A free custody account for children offers numerous advantages:

No custody account fees: Most providers do not charge monthly or annual fees for custody account management. This means that all the money invested is used directly for the growth of the custody account.
Low transaction costs: Many providers also offer reduced or no trading fees for the purchase of securities. This is particularly advantageous if smaller amounts are invested on a regular basis, as no unnecessary fees are incurred.
Tax advantages: In Germany, children can also use the **savers’ lump sum** of €1,000 (for single people) or €2,000 (for married couples) to receive capital gains tax-free. In this way, the amount that the child accumulates in the custody account can grow in a tax-privileged manner.
Long-term planning: With a custody account for children, long-term planning is possible and the assets can grow through continuous investment. This gives parents the opportunity to create a solid financial basis for their child’s future.

Conclusion

A free custody account for children is an excellent way to make early provision for the future of your offspring. It offers a cost-effective and flexible way to build up assets and benefit from the capital market. Parents can not only secure their child’s financial future with such a custody account, but also instil an early understanding of finance. If you start investing at an early age, you can benefit from the compound interest effect and build up considerable assets over the years – a gift that will last far beyond a child’s birthday.