Steer clear of the dodgy spruikers

Tamara’s teenage children want to invest their savings

QI have two young teenagers (14 and 15) who are starting out in the workforce. They have a bit of money put aside and are asking me how they can learn about shares.

I don’t really know where to start them off or even if they can at their age. Do we have a ‘drip-feed’ system where they can pay ‘x’ amount a month into a portfolio? I really need them to get sound advice.

Excellent question, Tamara. Of all the skills you can give your teenagers, money is one of the most important. Where you have an enormous headstart is that they are interested, and the fact that they are asking you rather than you pushing them is terrific.

I’d suggest they look at the Australian Securities Exchange (ASX) website, as it has a range of courses, starting with the essentials of investing in shares. This is free. Another terrific free source of information is ASIC’s Moneysmart website; it’s well worth them reading the shares section.

From here they can go to any number of courses. Where you can really help them is by keeping them clear of the get-rich-quick courses involving short-term trading and promises of great wealth. These courses do make people wealthy, but it’s usually the people selling and promoting these courses; consumers generally do very badly. My suspicion is that the promoters of these courses take consumers’ money and do what we should be doing, buying sensible investments with a long-term view.

I am totally biased, as I am chair of InvestSMART, but I mention it because it is cheap and I know it is effective. InvestSMART has a ‘boot camp for beginner investors’. This costs $49.50, but you might want to take a look, as it could be a good birthday gift.

In terms of a fund that takes regular contributions into a share fund, there are plenty of these. But do go for a low-fee manager. For example, Vanguard does this well and offers funds with a $200 minimum and regular investment.

Once your teenagers have done the ASX course, though, they may prefer to buy a few shares on the ASX that they choose. While a managed fund is probably the best solution, you do not learn a lot buying shares and it may well be something they find to be a valuable learning experience.