Ask Paul: What is the best investment option for a teenager?

Q. My daughter is 17, in her final year at school and works part-time (about 12 hours a week).

To date she has savings of about $2500 parked in a bank account and she would like to plan for her future by investing her savings somewhere other than in the bank.

I'd appreciate your advice. I have had a look at an Australian share fund (minimum investment $2000) but I am concerned about the management fees.

Would you consider investing in a few select shares as an option, though I do think a share portfolio needs to be actively managed?

I'd appreciate any feedback on managed fund option providers and what you consider are good investment options for a young person who would like to hopefully have a healthy deposit for a property in the next 10 years. - Lea

A. It is just fantastic, Lea, to see a young adult building savings and learning about investment.

I agree with your comments about fees.

Maybe a good solution is to go with an indexed fund managed by Vanguard or BlackRock.

You can use their local or international options for a tiny fee - just a fraction of 1%.

Equally, you could use a low-cost exchange traded fund, and there are plenty of these available.

I am just delighted that your daughter will move into her adult life not only with an investment plan but she will also be developing the skills to create wealth.