Too young to be given $10,000

Money Magazine Australia - - ASK THE EXPERTS -

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.

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