12K investment options

S

Salvadore

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My son (13) last year inherited 12,000 that has been put on deposit ever since. I'm conscious it's losing money where it is but am a bit bamboozled by the longer term investment options available.

He's shown a bit of interest in the US business channels (CNBC, Bloomberg) and in how the stock markets operate. I'd be interested in using the 12K to create a portfolio that would develop his interest and increase his understanding.

Anyone know where I might start?
 
If it's on deposit, he isn't really losing money - well, if you take inflation into account, I suppose he is.
 
I would start by educating your son first. The fact that he is showing interest in the stock market already is a great thing. The book Rich Dad Poor Dad is particularly good and an easy read no matter what age. Perhaps read it together.

As for investment options, putting it into a low cost ETF that covers the S&P 500 (for example) for the long term would be ideal. Current tax rates are not favourable, however, but this may change in the future. It's worth looking in to.

If your son can resist the urge to touch any of this money and let it compound over decades, he should retire a wealthy man.
 
Gulden said:
If your son can resist the urge to touch any of this money and let it compound over decades, he should retire a wealthy man.
Click to expand...

I don't think compounding even for 60 years will do that with € 12,000! Assuming a real return of 4% pa will increase the sum to € 120,000 - not bad but hardly wealthy!
 
Well if you are looking at this as a learning opportunity as well as an investment, tell him to make an investment plan himself.

A low cost ETF is a sensible investment but there is not much to learn.

The Motley Fool is an excellent website to learn from.

Maybe decide to pick 10 shares, to invest in. Challenge him to explain what his reason for each one is.

The kind of info on business channels is very news driven, its fine for someone with an understanding of the fundamentals.

Benjamin Graham's "The Intelligent Investor" is still the best guide to investing, a bit much maybe for a 13 year old, but you never know.
 
You can open kids trading accounts with Degiro, it takes a while to set them up but it works well and their low fees make sense for smaller trades.

I think you should then invest in a premium subscription to the Motley Fool, I am a subscriber to their stock advisor service, its about $100 a year but worth it. They track and recommend a large pool of stocks and have ones they advise for small starter portfolios, they tell you when to buy and sell and do great analysis of earnings reports. Best money I ever spent.
 
I think that you could teach your son a very valuable lesson by putting a portion of the money in low risk fixed income investment; compounding is basicially the most important concept of long term investing. You could look at Irish Goverment Bonds [broken link removed] or even just helping him to select the best deal on a deposit interest account.

I think investing in individual shares is fun, but unless you are doing serious research it is essentially a flip of a coin. And if you lose money its a lot less fun... but if he starts to look at why the price is going up and down he may learn something. If you read the posts here the majority of posters advise against doing this!

ETFs are probably a good choice but as the previous response said you are not going to learn a great deal. Take a look at Vanguard Total World Stock (VT).

If it was me I would probably encourage him to look at how he could do something entrepreneurial, if he developes a business head he will gain far more than a few % per annum.
 
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