Needs to be something you can possess for life? Some will argue memories are the only things that will last a lifetime.
No need to get al philosophical! It needs to be something that I can keep until the day I die.
I don't know really very hard question, firstly sorry to hear of your loss.
As to your question. I only have two keepsakes of those who have passed on, a couple of porcelain whiskey jars of my nains (as they remind me of how her flat was decorated when we went round ) and 2 model boats my next door neighbour made and gave to me as a kid ( his two hobbies where making wooden model boats and growing cacti ).
So I would suggest something your Grandad would have loved himself, maybe something assciated with a sport he supported or something related to his hobby or job possibly, or something that reminds you of how he liked to decorate his home.
Another way to think about it might be if he where still with us what would he buy you if he came into a windfall.
As I say my condolances
Thanks a lot. Personally I'm doing my best to think but can't think anything but a watch. I feel as if buying a guitar is a tad selfish tbh.