Ask Paul: I've invested thousands for my sons thanks to your advice


Dear Paul,

I am the mother of three boys aged 13, 16 and 20.

Back in 2001 when my first son was born, I read Money magazine and I took your advice and invested in a managed fund with Colonial First State. I made regular investments of $100 to $200 a month, plus a bit extra here and there, and now I have close to $50,000 in total for my boys.

ask paul clitheroe investing 30k for each son

I also took some more of your advice about compound interest and invested their birthday and Christmas gift money, plus whatever extra I could afford, into term deposits to make a sum of $30,000 for each boy. This worked out well.

However, over the past few years, the bank interest has been on a rapid decline and is not showing any signs of a quick recovery.

I recently withdrew their money from the term deposits as interest rates are so low. How should I now invest it? - Janine

You have made my day, Janine. As we celebrate the 250th issue of Money magazine, I strongly remember the "reader offer" we came up with where managers such as Colonial waived their entry fees to give our readers a better start to their investment.

As you can imagine, I am just delighted to hear that your regular, small amounts have turned into $50,000. This is a real example of why I am always banging on about regular investment and compound returns.

Sadly, though, you are correct: term deposits are not doing much for your boys, though you have done brilliantly to have $30,000 for each of them.

My suggestion would be similar to the one I made back in 2001 and what I am now doing for our grandchildren. Choose a good, low-cost fund with a growth-type portfolio and let time, regular investment and compound returns do the heavy lifting for your boys.

An exchange traded fund could do the job. One of the managers I suggested to Raymond (see above) such as Vanguard or BlackRock, or one of the large listed investment companies that hold a broad portfolio of shares such as Argo and AFI, would also be worth a look.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. View our disclaimer.
Money magazine
April 26, 2022 1.01pm


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