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Original poster

Teenager wants to invest v small amounts of money

36 replies

ColouringPencils · 22/04/2023 10:04

Is this a thing? He is only 13 - can he invest it himself or would I need to do it for him? And I mean really small amounts, I would guess under £50. I think he just wants to see how it works and if he can get any return from it.

If it's not possible, are there other ways I can support his interest in finances? He doesn't have a job - his only money is from birthdays and doing jobs around the house. He is very good at maths and has a growing interest in economics and all things money-ish.

OP posts:
determinedtomakethiswork · 22/04/2023 23:37

On Netflix, there's an eight part series called how to get rich. It might be interesting for your son to watch. The guy presenting it talks to lots of different people about money and recommends different approaches for each of them. One of the things he does cover is get rich quick schemes. He is very quick to slam this down.

stevalnamechanger · 22/04/2023 23:42

Wenfy · 22/04/2023 23:30

Go to HL, top funds, and choose the ones with the lowest prices. There are some excellent Indian funds right now - as the India to SE Asia nexus is where Asian growth is going to be for the forseeable future.

Sorry but a terrible answer ! Top funds lists often marketing drivel

stevalnamechanger · 22/04/2023 23:43

seekingasimplelife · 22/04/2023 20:14

This is a great way for your DS to learn about savings and investments. It's a very good time to start when he shows a keen interest

Here's what my DC did at a similar age...

1.Investigate bank current accounts. By 13 he can access a contactless Visa debit card, Apple Pay; use a banking app, and buy his own purchases online. Some of these current accounts pay a reasonable interest on the balance.

2.Investigate Childrens' saving accounts that offer the best interest rates and terms, and start to appreciate the value of compound interest - understand meaning of Albert Einstein's quote .'Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it'.

3.Once he has some savings, start to look to investments. One way to do this is to invest the same set amount in a number of assets and leave them invested to track how they perform comparatively over time - so for instance 5 investments - a cash savings account; a low cost index tracker such as a global fund or S&P500; some individual shares in one company of his choice - perhaps a technology one might interest him (all of these except cash could be held within a JISA in his name); bitcoin or other digital currency; a gold/mining or commodities tracker fund - or just buy a physical coin such as a tenth ounce gold coin, or 1oz silver Britannia coin to track resale value.
For these investments I matched the amount my dc saved to use.

The advantage of holding on to 5 different types of investments is it will avoid excessive dealing costs of repeated buying and selling once the initial investments are made. It will also give him a clear idea over a longer time frame of how certain types of investments perform compared to others - and what circumstances and events are likely to impact those investments. This might encourage him to take an interest in the financial news.

He could also look into Warren Buffet's million dollar bet in 2008 with the hedge fund industry - which is very instructive.

👏🏼👏🏼👏🏼👏🏼👏🏼

Awesome answer

Original poster
ColouringPencils · 23/04/2023 09:51

Wow, thank you for all these ideas! I really have no idea about investing and haven't done it myself, but I am going to look into the suggestions later today and then will talk to him about it.

OP posts:
Singleandproud · 23/04/2023 10:08

I opened a junior SIPP with AJ Bell for DD, I started putting her £25 a month into her account and then she researches the stocks and invests where she sees fit. She is aware of the charges and can see via graphs how her money is growing or not, she won't get access to it until she's 60 and naturally overtime even if she makes bad decisions it should grow.
I have no real knowledge of the stock market but seems a good way for her to learn for the same cost as a cinema trip.

morejumpingfrogs · 23/04/2023 10:23

seekingasimplelife · 22/04/2023 20:14

This is a great way for your DS to learn about savings and investments. It's a very good time to start when he shows a keen interest

Here's what my DC did at a similar age...

1.Investigate bank current accounts. By 13 he can access a contactless Visa debit card, Apple Pay; use a banking app, and buy his own purchases online. Some of these current accounts pay a reasonable interest on the balance.

2.Investigate Childrens' saving accounts that offer the best interest rates and terms, and start to appreciate the value of compound interest - understand meaning of Albert Einstein's quote .'Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it'.

3.Once he has some savings, start to look to investments. One way to do this is to invest the same set amount in a number of assets and leave them invested to track how they perform comparatively over time - so for instance 5 investments - a cash savings account; a low cost index tracker such as a global fund or S&P500; some individual shares in one company of his choice - perhaps a technology one might interest him (all of these except cash could be held within a JISA in his name); bitcoin or other digital currency; a gold/mining or commodities tracker fund - or just buy a physical coin such as a tenth ounce gold coin, or 1oz silver Britannia coin to track resale value.
For these investments I matched the amount my dc saved to use.

The advantage of holding on to 5 different types of investments is it will avoid excessive dealing costs of repeated buying and selling once the initial investments are made. It will also give him a clear idea over a longer time frame of how certain types of investments perform compared to others - and what circumstances and events are likely to impact those investments. This might encourage him to take an interest in the financial news.

He could also look into Warren Buffet's million dollar bet in 2008 with the hedge fund industry - which is very instructive.

This is really great advice!

We're doing something similar for DS, investing in trackers with Vanguard. First it was in a junior ISA, and we matched what he put in to encourage him, but now it's transferred into his name as he's turned 18.

A good website to read about why trackers and not active funds, and why you drip money in and hold, not trade, is monevator. Some of their advice is quite specialist, but they have a really sensible set of articles about how to start.

It's a fantastic thing to get him into so young because he's got plenty of time to see out any dips in the market!

seekingasimplelife · 23/04/2023 10:25

Singleandproud · 23/04/2023 10:08

I opened a junior SIPP with AJ Bell for DD, I started putting her £25 a month into her account and then she researches the stocks and invests where she sees fit. She is aware of the charges and can see via graphs how her money is growing or not, she won't get access to it until she's 60 and naturally overtime even if she makes bad decisions it should grow.
I have no real knowledge of the stock market but seems a good way for her to learn for the same cost as a cinema trip.

Just to say that Fidelity don't charge a service fee for a Junior SIPP, compared to AJ Bell charge of 0.25% up to £10 per month (in case you're think of moving provider any time).
Fidelity also don't charge for fund transactions - AJ Bell £1.50.
(If you DD is undertaking lots of share trading Fidelity would prove more expensive).
Charges can have a big impact on growth of investments over time.

https://moneytothemasses.com/saving-for-your-future/pensions/best-and-cheapest-junior-sipps

Best and cheapest Junior SIPPs - Money To The Masses

We take a look at the best and cheapest Junior SIPPs. Check out our cost comparison table to see the cheapest children's pensions available

https://moneytothemasses.com/saving-for-your-future/pensions/best-and-cheapest-junior-sipps

Singleandproud · 23/04/2023 10:30

@seekingasimplelife thanks for the advice, I'll give that link a read.

DD generally just likes to track what she's invested and saves until she has £100 then puts it into a different tracker so can see what goes up and down. I think she's got 5 atm some have made her a few £ and others have lost just under £1. She's only been doing it a year (since she showed an interest in investing).

GastonHaugh · 23/04/2023 10:37

We use GoHenry - it has a section where you do online animated lessons about aspects of finance - eg compound interest, taxation, scams, MLM, etc and you can set it so that it pays the child an amount for each module completed. I think I set £1. It has been transformative. They understand debt and debt leverage and the importance of regular savings etc plus a lot of more complex concepts.

They also each have the app on their phone so they can see how much money they have. Their pocket money goes in there. They also each have savings targets they have chosen.

Eldest has cleared a load of old clothes of mine via Vinted, and the money popped straight into his account which he could see.

Financial literacy is ESSENTIAL for kids. I think so much misery could be avoided if the world just knew about how it all worked.

As an aside, I think it was Charlie Munger who said that the very wealthy “take big risks with small amounts and small risks with big amounts.” I liked that.

GastonHaugh · 23/04/2023 10:56

I’ve got an affiliate link if anyone would like it, for gohenry. Pm me.

Thisismyluckyday · 23/04/2023 20:01

https://www.fool.co.uk/investing-basics/the-miracle-of-compound-returns/

“The earlier you start investing, the more time you leave for the miracle of compound interest to take effect. Someone who invests £100 a month from age 20 to 29 and then lets their investments grow, is likely to have more money at age 60 than someone who invests £100 a month from age 30 to 59.”

Guide to Compound Interest: The Miracle Of Compound Returns

Compound interest is the key to building long-term wealth, but how exactly does it work? And what’s the magic formula? We’ll break it down.

https://www.fool.co.uk/investing-basics/the-miracle-of-compound-returns/

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