Saving for a Child

The most powerful asset in a child's savings is time. Starting at birth gives you almost two decades in which compound interest does the heavy lifting. This guide explains how to build meaningful savings for a child's future, from the state's own vehicle to additional routes.

Disclosure: Educational information only. This is not investment advice. Any action you take is your own responsibility.

The starting point: Savings for Every Child

The state has already opened a savings account for every child. Under Savings for Every Child (Chisachon LeKol Yeled), a monthly sum is deposited for every child receiving child allowance, until age 18, and under certain conditions until 21.

Parents can choose the managing institution and the investment track, and can even double the deposit out of the child allowance itself.

That gives two decisions that genuinely matter: choosing the track, where an equity track is usually preferable over such a long horizon, and doubling the deposit. See child allowance.

Additional savings routes

Beyond the state savings, parents wanting to build a larger fund can consider:

An investment provident fund — flexible, liquid, with a generous contribution ceiling. See investment provident fund.

A study fund or financial savings in the parent's name, earmarked for the child.

An index-based investment portfolio for the long term. See the capital market.

The choice depends on the goal, the horizon, and whether you want the money held in the child's name or the parent's.

The power of starting early

The central principle is to start early and stay consistent. A modest monthly deposit, sustained across eighteen years, aided by compound interest, accumulates into a significant sum — most of which is growth rather than the money you put in. The earlier you start, the stronger that effect.

Common mistakes

1. Leaving Savings for Every Child on the default track. A suboptimal track costs real money across eighteen years.

2. Delaying the start and losing expensive years of compounding.

3. Choosing an overly conservative track for a long horizon, which forfeits return.

Summary

Saving for a child is among the most rewarding investments available, because time works in your favour. Start with Savings for Every Child and choose the right track, then consider complementary routes. See child allowance and the capital market. We provide the knowledge — the decisions remain yours.