Saving for your child's future: what are your options?

Michele, a parent in Zurich, decides to put aside fifty francs a month for their daughter Leonie the week she is born. Michele is not yet sure whether that money should sit in a savings account, an ETF savings plan, or something else entirely. Eighteen years later, that early decision, more than the exact amount, will have shaped what Leonie actually receives.

This article looks at the main ways to save or invest for a child in Switzerland, how ownership and taxes work depending on the structure you choose, and how much difference starting early actually makes.

Parents, grandparents and godparents in Switzerland typically choose between three main approaches: cash or physical gifts, a savings or gift account, and an ETF savings plan or robo advisor solution. Each works differently. The right choice depends on what matters most to you.

A cash gift is the simplest option. You hand over money directly, often in an envelope for a birthday or other occasion. Physical gifts such as a gold coin, a Swiss tradition often given by godparents at baptism or a birthday, work similarly. They carry strong emotional and cultural value, but generate no yield. A single coin typically costs several hundred francs, which makes it a meaningful one-off gift rather than something you give every month. It also needs to be stored securely, for example in a safe deposit box.

A savings account or gift account, opened at a bank, keeps the money separate and pays a small amount of interest. Many banks let you choose when the account transfers to the child, which gives you control over timing. A small number of parents also place part of the money in a fixed term deposit, known in Switzerland as a Kassenobligation, which locks funds away for a set period in exchange for a somewhat higher fixed rate. The trade off for savings accounts and fixed term deposits alike is that returns often barely keep pace with prices over the years.

An ETF savings plan, whether self managed through a broker or run through a Swiss robo advisor, invests regular contributions in a diversified basket of shares. Over long periods, this has historically delivered higher growth than cash based or physical options, though the value can fluctuate from month to month.

When comparing these options, the classic investment triangle of availability, return and safety helps structure the decision. Cash and a savings account stay readily available with a stable nominal value, but offer little to no return. A gold coin holds strong symbolic value but is less immediately available and its price can fluctuate. An ETF savings plan trades some short term safety for a materially better chance of long term return. There is no single correct answer. The right option depends on your time horizon and how comfortable you are with your child's savings moving up and down in value along the way.

A savings account protects the nominal amount you deposit, but not its purchasing power. An ETF savings plan carries short term price risk in exchange for a stronger chance of real growth over a long horizon. Both carry a form of risk, but a different kind of risk.

With a savings account, the risk is quiet and easy to miss. When the interest rate is lower than the rate at which prices rise, the money technically stays the same but buys less over time. Over eighteen years, that erosion adds up, even though the account statement never shows a negative number.

With an ETF savings plan, the risk is visible and can feel uncomfortable. Markets move up and down, and a portfolio worth a certain amount today can be worth less in a year. This is where a child's long time horizon changes the picture. Historically, the longer money has stayed invested in a broadly diversified portfolio, the more the odds have shifted towards a positive outcome. Even so, individual markets have occasionally taken many years to recover from a downturn. Past performance is not a guarantee of future results, but time has historically been one of the most effective tools an investor has against short term volatility.

Markets fluctuate regardless of the vehicle you choose for a contribution left untouched for a decade or more. The real question is whether you are comfortable seeing the value move up and down along the way, in exchange for a materially better chance of real growth by the time your child needs the money.

The account can be held either in your own name or directly in the child's name. This single decision determines who controls the money and when the child gains access to it.

If you open the account or investment in your own name and designate it for your child, you keep control. You decide when the child receives the money. That might be at eighteen, at the end of their studies, or at another milestone that suits your family. You can also adjust or pause contributions freely, since the money remains legally yours until you choose to transfer it. The trade off appears in the rare event of your own bankruptcy or a divorce. In principle, the money could then be treated as part of your own assets, since nothing legally separates it from your other savings.

If you open the account directly in the child's name, the money becomes the child's property from the moment it is deposited. In Switzerland, this is known as the child's own assets, and it is protected: it cannot be claimed by your creditors and stays clearly separated from your own estate. The trade off runs in the other direction. Once the child turns eighteen, they automatically gain full control over the money, regardless of what you originally intended it for, and you can no longer decide when or how it is used.

This decision is easier to change in one direction than the other. Moving money from your own name into the child's name later is straightforward: it is simply a gift, the same step you would take at eighteen anyway. Moving money the other way, from the child's name back into your own, is far more restricted, since assets that legally belong to the child cannot simply be reclaimed by a parent. For this reason, if you are unsure, starting with the account in your own name keeps more options open.

Neither structure is better for everyone. A family that values flexibility and control over timing often prefers to keep the account in their own name. Others prioritise legal protection and want the money unambiguously tied to the child from day one, in which case an account in the child's name fits better.

In most Swiss cantons, gifts from parents or grandparents to a child are exempt from gift tax. The wealth and any investment income still need to be declared while the child is a minor.

Capital gains are tax free for private individuals in Switzerland, which applies equally to a child's investment account. If an ETF bought for a certain amount is later sold for more, the difference is not taxed. This is one of the structural advantages of investing rather than saving for a child, since it applies regardless of which option you choose for the account.

Wealth tax works differently. Married parents file a joint tax return, and a minor child's wealth and other income are automatically included in it. If only one parent holds parental custody, that parent declares the child's wealth and income. Where parents are separated or unmarried but share custody jointly, most cantons split the child's wealth and other income equally between both parents' tax returns. In practice, this rarely creates a significant additional tax burden, since most cantonal wealth tax allowances are high enough to absorb a child's account without pushing a family into a higher bracket.

Gift tax rules depend on your relationship to the child and, for larger amounts, on which canton you live in. As a general rule of thumb, larger gifts, sometimes from around CHF 5'000 upward, should be documented and mentioned in the tax return. This applies even where no tax is due, so the origin of the money stays clearly traceable later. For gifts between parents and their own children, most cantons apply no gift tax at all, regardless of the amount. The picture changes for godparents, stepchildren in blended families, or other non-relatives, where cantonal tax rates and exemption thresholds vary considerably.

Once the child turns eighteen, the situation simplifies. From that point, they declare their own wealth and income themselves, and the parents' role in the tax treatment ends. Since cantonal rules vary and individual circumstances differ, it is worth checking the specifics with your cantonal tax office or a tax adviser.

Grandparents, godparents and other relatives can contribute directly to a child's savings or investment account. This can happen through occasional lump sum gifts, or by paying in independently of any particular occasion.

In practice, most grandparents and godparents prefer to give a child something that creates joy and connection in the moment: a toy, an experience, or a gift the child can actually enjoy at that age. That instinct makes sense and does not need to be replaced. What some families do instead is add a separate, occasional contribution to the child's account. This often happens at milestones such as birth, a round birthday, or a confirmation, rather than turning every birthday into a cash transfer. Many Swiss providers that offer children's investment solutions allow more than one person to pay into the same account once it is set up. A grandparent's occasional lump sum can then sit alongside what the parents already contribute, building the same pot rather than staying scattered across separate savings books.

A lump sum contributed early has more time to grow than the same amount added later, simply because it stays invested for longer. What matters most is giving money time to work, whatever the size of the gift and whenever it is made.

The most common mistake is treating a savings account as the automatically safe choice. In reality, it quietly loses purchasing power over the years, simply because the interest rate rarely keeps pace with rising prices. A savings account protects the number on the statement, not what that number can actually buy by the time the child needs it.

A second mistake is postponing the decision of whose name the account should be under until after it is already opened. As the previous section shows, moving money into a child's name later is straightforward, but moving it back out is not. It is worth deciding deliberately from the start rather than defaulting to whichever option seemed easiest at the time.

A third mistake is reacting to short term market movements by pausing contributions or switching strategy when values fall. This undermines the very advantage a long horizon is meant to provide. A dip in the tenth year of an eighteen year plan rarely matters if contributions continue steadily. It matters far more if it triggers a change in approach.

A fourth mistake is letting contributions lapse irregularly instead of automating them. Setting up a standing order that transfers a fixed amount each month, timed to coincide with salary payment, removes the temptation to skip a month when other expenses come up.

A fifth mistake is overlooking ongoing costs. Fees for managing a savings plan or investment account vary considerably between providers, and even a difference of a fraction of a percentage point compounds meaningfully over eighteen years. It is worth comparing the total annual cost of a solution before committing to it, not only its headline features.

A regular contribution matters more than a large one time gift, and starting earlier always gives the same amount more time to grow. Even so, it is rarely too late to start something meaningful.

Take a contribution of CHF 50 a month invested from birth. Assuming a long term average annual return of around 6.7%, that grows to roughly CHF 20'000 by the time the child turns eighteen. About CHF 11'000 of that is what was paid in, and the rest is growth. The same CHF 50 a month, started only when the child turns ten, reaches around CHF 6'000 by eighteen, with about CHF 5'000 of that being direct contributions. The monthly amount is identical in both cases. The difference comes entirely from how long the money has had to work.

This illustrates a wider point. If your child is already seven, nine or twelve and you have not started yet, that is not a reason to wait further. Every year you start earlier gives the money more time, but every year you start later is still better than the year after that. A contribution beginning today, however old your child is, is always the second best time to start, right after the day they were born.

As for how much to save, there is no universally correct figure. What matters more than the exact amount is consistency. A modest sum paid in every month for fifteen years generally outperforms a larger sum paid in occasionally, simply because regular contributions benefit from more entry points and more time invested overall. Choosing an amount you can maintain without strain, and automating it so it happens whether or not you remember, tends to matter more than choosing the largest amount you can afford in any single month.

What are the best options for saving for a child's future in Switzerland?
Parents can choose between cash gifts, savings accounts and investment solutions such as ETF savings plans. Each offers a different balance of accessibility, risk, potential return and control.

How does investing for children in Switzerland work?
Investments can be held in an adult's name or, depending on the provider, directly in the child's name. The choice affects ownership, control and when the child can access the assets.

How does a child savings account in Switzerland work?
A child savings account allows money to be set aside for a minor, usually earning interest. Ownership, withdrawal rights and the age at which the child gains control depend on the account and provider.

What is an ETF savings plan for kids in Switzerland?
An ETF savings plan invests regular contributions in exchange-traded funds, providing diversified market exposure. Its value can rise or fall and investment losses are possible.

What children's savings options in Switzerland are available?
Common options include cash and physical gifts, savings or gift accounts and investment solutions such as ETF savings plans. The appropriate choice depends on the objective, time horizon, ownership structure and tolerance for investment risk.

The content in this article is provided for educational and marketing purposes only. It does not constitute investment advice or financial recommendations.