How to Invest for Your Children’s Future: Long-Term Financial Products
Amid the current climate of economic uncertainty, many families are turning to financial vehicles that can help them secure their children’s long-term future. But is there a minimum age to contribute to a Pension Plan? What about an Investment Fund? Legally, yes. Only adults are allowed to sign up for such financial products. For this reason, many parents choose to invest on behalf of their children, acting as their legal representatives to begin building a solid financial foundation early on.
According to the Household Financial Survey by the Bank of Spain, younger generations today possess less net and real estate wealth than previous ones, highlighting the importance of anticipating family savings.
This trend is increasingly common, making it essential to foster financial literacy at home in order to prepare children for a financially responsible life. Moreover, it teaches them the value of money from an early age, the opportunities it can offer, and how to manage it sensibly and efficiently.
Parents’ motivations for making such early investments may vary, but in general, this strategy is viewed as a safety net to ensure their children can enjoy a certain level of well-being and financial independence, while also enabling access to unique opportunities in areas such as education, entrepreneurship, or homeownership.
Types of products to start building wealth in the medium and long term
There are numerous financial products designed to help families save and invest with long-term goals in mind—most of which don’t require large initial sums of money. The key is choosing the right product or combination based on your needs.
Real estate investment remains one of the most reliable ways to build wealth. Purchasing a property to rent out or for the child’s future use is becoming increasingly common. However, this type of investment traditionally required large sums of money, which is why new models like real estate crowdfunding have been a game changer in the sector.
An example is Urbanitae, a real estate crowdfunding platform that has democratized access to this market, allowing retail investors to participate with contributions starting from just 500 euros. These small contributions can generate medium-term returns, making them an appealing option for building a family legacy.
What’s most interesting is that this model allows for profits to be reinvested into new projects. Instead of withdrawing capital after an investment ends, you can reinvest it, which contributes to a gradual increase in wealth. This creates a compounding effect without the need to increase the initial investment, making Urbanitae a compelling option for building a family legacy in an accessible way.
Urbanitae has become a leading platform in Spain, offering a broad range of projects—from residential to commercial and industrial developments—allowing investors to diversify across multiple opportunities. Furthermore, the platform is regulated by Spain’s National Securities Market Commission (CNMV) and has a robust committee of experts that carefully selects and manages each project. The average annual return on completed projects exceeds 14%, making it an attractive alternative for parents looking to build long-term wealth for their children by leveraging opportunities in the real estate market without needing significant capital outlay.
Equity investment funds: a long-term bet on your children’s future
When we think about securing our children’s future, it’s not just about offering them love, education, or emotional stability. It’s also about preparing the ground so that when the time comes, they have the financial resources to take important steps in life—whether that means pursuing a degree, becoming independent, starting a business, or even starting a family of their own. In this context, investment funds—particularly equity funds—are a very attractive tool for building long-term financial support.
Unlike more conservative products such as deposits or fixed-income funds, equity funds invest in publicly traded company shares. While their value may fluctuate in the short term, historically they have proven to be among the most profitable options for long-term investing. The key lies in the long-term outlook: the longer the money stays invested, the more opportunity it has to grow thanks to the power of compound interest, which allows reinvested earnings to generate even more returns over time.
A pension plan for a baby?
Although pension plans are primarily designed for retirement and might seem premature to use early in life, they can actually be a smart strategy for family legacy planning. These instruments not only help set aside long-term savings to ensure children’s financial stability but also offer significant tax advantages worth considering.
One little-known benefit is that if the holder reaches age 65 and chooses not to withdraw the funds, the capital continues to generate returns, allowing the wealth to keep growing. Additional contributions can also be made to further strengthen this financial base.
If the holder passes away without having withdrawn the funds, the accumulated capital is not lost—it becomes part of the inheritance and can be accessed by the heirs. They can choose to receive the funds in various ways, either through periodic payments or a lump sum, giving them flexibility to adapt to their financial needs.
From a tax perspective, one of the biggest advantages is that taxes are not due at the time of death, but rather when the heirs decide to withdraw the money. This enables strategic planning regarding when and how to access the funds, minimizing the tax burden and spreading it over time. In certain regions of Spain, this taxation can be significantly more favorable, as it may be subject to inheritance tax, which in many cases has a lower rate than personal income tax.
