Why you should switch from saving to investing for your children

First of all, do you remember what you were able to buy with EUR 20 back in 2002, when the euro was launched? Today, the purchasing power of these EUR 20 is significantly lower because prices have gone up a lot for most goods. Knowing that, instead of thinking of the amount of money your child will get, think of what he will be able to buy with the money you saved for him so far.

*interest rate on 09/27/2023 on Tweenz savings account  

** inflation rate June 2023 - Statec 

In such a scenario, having EUR 10.000 on your savings account today will only be worth EUR 9.400 in about 10 years’ time.

Think about it: on one side, kids are growing up very quickly, that is for sure. On the other side, parents tend to save money for their children until they are 18 years old or even longer, so for several years, they are putting money on the side.   

Don’t you think that in this time period, there is something smarter to do  regarding your savings options? 

To maintain the value of your savings, it's a good idea to diversify into a number of different areas: traditional savings, term deposits and investments in the financial markets can provide long-term returns. 

* The S&P500, or Standard & Poor's 500, is a capitalisation-weighted index of the 500 largest US companies listed on the New York Stock Exchange. It is an important benchmark for assessing the stock market in the United States and globally. 

Investing in the stock market is not typically a short-term decision: the investment should be considered over the long term, with the likelihood that the investments you buy today will be worth more when you decide to sell.   

 With this in mind, it may be worth looking at the average performance of the S&P 500 index over 5, 10, 20 and 30 years to gain a better understanding of market dynamics. 

source : S&P 500 Historical Annual Returns | MacroTrends

Investing is your best alternative because the longer your time horizon, the less likely you are to lose money on the stock market. 

Your child's first 20 years are the best time to build capital for its future.