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