Buy shares for son

Money Magazine Australia - - ASK PAUL -

QMy wife and I have been putting money aside for our six-year-old son since he was born. Cur­rently, he has around $13,000 in a sav­ings ac­count that pays around 2.4% in­ter­est. This is a stan­dard sav­ings ac­count where we have to de­posit $100 a month and make no with­drawals.

As we don’t plan to let our son have this money un­til he is a least 18, we are look­ing at long-term in­vest­ment plans. What do you sug­gest we do with his sav­ings, keep­ing in mind that we will con­tinue to de­posit $100 a month into an ac­count for him. Should we ex­plore term de­posits or man­aged funds?

Yes, you should. With a 12-year time frame, in my opin­ion, hold­ing the money in low-in­ter­est cash is sub-op­ti­mal.

My dad and mum also put aside sav­ings for me. They bought shares, which ap­pre­ci­ated enor­mously by the time I needed the money. We did the same for our kids and got the same re­sult.

So I think you should look at a low-cost share fund or sim­ply buy a few well­known shares via a low-cost online bro­ker. In the short term, shares are volatile but your son has 12 years or more.

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