Too young to be given $10,000
QI am a 65-year-old grandmother who saves small amounts for my grandchildren in Bankwest bonus saver accounts, which currently earn 4.75%. My eldest granddaughter is turning 15 and will no longer be eligible for this account.
The amount saved will be close to $10,000 and although not a fortune I feel it would be too much to hand to her at this time. I would like to invest it and possibly add to it for a few more years to come.
Would you be able to suggest alternatives that I could consider? It really depends how long you want to invest for your grandchildren, Dee. Over time the returns on shares tend to be higher than on cash in the bank but I do like anyone buying shares to look at a minimum of seven years. This means your oldest granddaughter would be 22. This is still pretty young.
So I would consider starting a small share portfolio for her. You could easily do this by using a managed share fund. Companies such as Vanguard, Perpetual and Colonial First State, along with many others, offer share funds. You could also use an exchange traded fund (ETF).
I would encourage you to do a bit of reading first. You are likely to find the MoneySmart website a useful source of information.