A grandparent’s guide to investing for grandchildren

When you think about the gifts that grandparents love to give their grandkids, you may picture a crisp bill folded into a birthday card with a sweet note, or a check tucked inside an envelope at the holidays. It’s thoughtful, it’s personal, and kids always seem to love it.

But what if, instead of money that gets spent right away, it could grow right with your grandchild? This is what investing for grandchildren is all about. It turns “here’s some money” into “here’s a little head start on your future.”

Why grandparents might want to invest

Grandparents don’t just give gifts. They pass down stories, traditions, and advice. Smart financial basics can also be part of that. Investing is one way to say, “I believe in you and your future.”

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Some grandparents want to help with big things, like college, a first car, or a down payment. Others might share their knowledge on how saving and patience can pay off. Either way, the message is: This is a gift that lasts.

4 simple ways to invest for grandkids

You don’t have to be a financial whiz to give your grandkids a head start. Here are four of the most common options that are simple to get going and easy to do.

1. Custodial accounts

Think of this as an account you manage until your grandchild is old enough to take over. With custodial accounts, the money has to be used for their benefit, but that can mean a lot of things. It could be braces, sports equipment, summer camp, or eventually, tuition. The nice part is knowing you’re helping when they need something along the way, but still teaching them that money isn’t just for spending right now.

2. 529 plans

If you want your investment for your grandchildren to go straight toward their education, a 529 plan can be a great fit. With 529 plans, the money grows tax-free and can be used for tuition and other school-related costs when your grandchild is approaching school age or getting ready to go to college. 

3. Savings bonds or CDs

Thinking a simple, steady route would be a better option? You might want to consider savings bonds and CDs. They may not grow as fast as other investments, but they tend to be safer and more dependable, which is why many grandparents like them. Plus, it comes with a guarantee that your gift will be there when your grandchild needs it.

4. Investment accounts (with a parent’s help)

If you’d like more flexibility and some added money management lessons for your grandkids, you can ask their parents to set up an investment account you can contribute to. This could mean investing in stocks, ETFs, or mutual funds. Beyond the growth potential, it also gives kids the chance to learn what investing looks like in real life, with you and their parents guiding them along the way. 

This is really easy to do if your family uses Greenlight. Parents can set up investing for their kids©, and since Greenlight allows up to five children on one account, you can contribute for all of them in one place. It’s a great option because parents keep control, and grandkids get a head start in investing education.

Things to think about before investing for your grandchildren

Before you make a decision, it's helpful to discuss it with your grandchild’s parents. A quick conversation helps ensure you’re all aligned on what the money is for, how it’ll be managed, and what kind of account makes sense.

Also, consider how long the money has to grow. A gift for a toddler has years to build up, but a teenager might need it sooner.

Investing for your grandkids is more than a financial decision. It’s a way to show them that you care about their future. Long after the toys are forgotten, they’ll remember the lesson (and the love!) behind your gift.

If you’d like to give your grandkids a head start on learning about money, Greenlight can help. Kids and teens can explore investing with an all-in-one app designed for families. It’s a safe, simple way to pass down money lessons and stretch your contributions even further.

Want to raise savvy investors? With Greenlight, kids get real-world experience under your guidance. Try Greenlight, one month, risk-free.†

© 2025 Greenlight Investment Advisors, LLC, an SEC Registered Investment Advisor provides investment advisory services to its clients. Investing involves risk and may include the loss of principal. Investments are not FDIC-insured, are not a deposit, and may lose value.