Ask Paul: Best place to save for my grandkids' future?


Q: I am a 65-year-old grandmother who saves small amounts for my grandchildren in Bankwest bonus saver accounts, which currently earn 4.75%.

My eldest granddaughter is turning 15 and will no longer be eligible for this account.

The amount saved will be close to $10,000 and although not a fortune I feel it would be too much to hand to her at this time.

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I would like to invest it and possibly add to it for a few more years to come.

Would you be able to suggest alternatives that I could consider? - Dee

A: It really depends how long you want to invest for your grandchildren, Dee.

Over time the returns on shares tend to be higher than on cash in the bank but I do like anyone buying shares to look at a minimum of seven years.

This means your oldest granddaughter would be 22. This is still pretty young.

So I would consider starting a small share portfolio for her. You could easily do this by using a managed share fund. Companies such as Vanguard, Perpetual and Colonial First State, along with many others, offer share funds. You could also use an exchange traded fund (ETF).

I would encourage you to do a bit of reading first. You are likely to find the MoneySmart website a useful source of information.


Paul Clitheroe AM is a respected financial adviser and Money's founder and editorial adviser. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books. Click here to email Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section.
November 27, 2017 10.37am

Perhaps another point to add will be to investigate ways to get tax efficient income/growth based on the chosen investment structure. Whose name should the investment be in and how should it be structured? I'll encourage you to seek professional financial advice to understand various options available.

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