How to advise teenage son?

racing_blue

Advice from the sages please.

This evening my 15 year old son asked for advice about "doing something better with his money". He has saved around £2000 from what has been essentially a hobby job & it is in a young saver account.

I don't know how to go about answering him & managed to duck the question, at least for tonight.

I mean, I know how I would invest £2,000 or £200,000 - it would go into index funds- but that is not really the issue here. I am concerned that any answer I give will be more about my unspoken expectations of how his life might pan out. Which kind of feels uncomfortable. And the last thing I want to do is infect him with any of the neuroses or weird behaviours around money that I have built up over the last 40 years. There is plenty of time for him to contract those out in the field I reckon.

So, how to handle it?

elsien

What's he saving it for and when does he think he might be spending it?

Southend1

There's a whole world of possibility out there. He could give it to charity, blow it all on a party for his friends, save towards a house deposit or uni fees, etc etc. I think you need to talk to him and ask a lot of questions aimed at starting a discussion about what he hopes to achieve with his money. Elsien's are a good starting point.

mgdavid

racing_blue wrote: »

..... 15 year old son ..... has saved around £2000
......... And the last thing I want to do is infect him with any of the neuroses or weird behaviours around money that I have built up over the last 40 years. ......

TBQH I would have thought it so unusual for a 15 year old to have saved 2k that he already is infected
The answers to Elsien's questions are the nub of it; if he's going to want to use it before he's 21 (uni / gap year / car / whatever) then it's too short a timescale for safe investment so a Nationwide or TSB at 5% might seem sensible?

alanq

mgdavid wrote: »

so a Nationwide or TSB at 5% might seem sensible?

If you are referring to interest paying current accounts the minimum age for those is 18.

racing_blue

mgdavid wrote: »

TBQH I would have thought it so unusual for a 15 year old to have saved 2k that he already is infected

Yes I'm afraid you are probably right. As Philip Larkin says:

"They fcuk you up, your mum and dad. / They may not mean to, but they do. / They fill you with the faults they had / And add some extra, just for you."

We have our kids basic needs covered until they enter adult life, whenever that may be. So I don't think our kids have any need to spend what they have earned. And maybe our eldest has caught my tightwad virus or ingerited the gene because he shows no inclination to spend at this point.

My instinct is to suggest he put some by as emergency cash and to split the rest 50:50 stocks and bonds. In practical terms, maybe Vanguard all-world ETF & NS&I premium bonds (which while not really a bond, offers a bit of colour and has the word "bond" in the name). But clearly this advice is loaded with all sorts of messages. Like... why?

Some point in my 30s I decided that income, spending and capital were three very separate concepts and that I should maximise one, minimize one, and work on the other. In other words, I'm a tightwad. I suspect this is going to be apparent from any conversation we have about what he should do with his money- is it healthy to give a teenager a glimpse inside the stinge-jitsu dojo, or should I just keep quiet? I'm genuinely torn.

edinburgher

Speaking as someone who remembers the standard intellectual arrogance of my teenage years (stuff you parents, I know all the answers!) the only thing you can do is be thankful he asked the question and encourage him to learn the answer for himself.

Pointing him to the various MSE boards and a couple of investing blogs etc. can't hurt. It might also be good if you explain what you do with your money and why, it's always good to have some real life examples to agree with (or challenge).

I wish my parents had had the time or interest in explaining a bit more of this money lark when I was younger, but would I have listened? :think:

xylophone

Your child cannot hold stock market based investments (except through a JISA), until he is 18.

You could hold a stock market based account for him in bare trust.

Does he have a JISA? This can hold cash and or stock market based investments.

https://www.gov.uk/junior-individual-savings-accounts/overview

chile_paul

I think it's fantastic that he's asking you the question - well done! I think it's really important for you not to tell him the answer but to help him explore some of the options and the pro's and con's of each. You could also direct him to forum's like this but that might be too much like hard work

Help him to explore what he might want to do with that money in a few years time (mortgage, uni fee's, gap year etc.)

Speaking from personal experience (I can just about remember being that age) I was just getting interested in money at that age - GCSE and then A Level Economics made me consider the reality of money for the first time! As I was interested in it my M&D encouraged me to invest a small amount into a FTSE 100 company that I chose - less about trying to make a serious return on investment but more to encourage my interest in the area. In the end I chose Tesco having done a modicum of my own research and it did pretty well for me over the next 10 years or so. The rest of my savings at that age were split into savings accounts and a stocks and shares ISA (I think they were still either TESSA's or PEP's back then??)

Your child cannot hold stock market based investments (except through a JISA), until he is 18.

Is this definitely the case, have the rules changed as it certainly wasn't an issue when I was younger (I might have been 16?)? It is a real shame if this is the case as it is a disincentive to getting youngsters understanding how investments work at a young age.

xylophone

Minimum age to invest in OEICS 18 example http://scottishwidows.co.uk/investments/open_ended_investment_companies/index.html

Minimum age to trade in shares 18 see http://www.sharesexplained.com/how-old-to-buy-shares

https://help.stockbrokers.barclays.co.uk/help/accounts/shares-child

kidmugsy

At that age I wanted a motorbike and saved like billy-oh to get one. In those days I used a Savings Bank account: whatever happened to them, eh? If he doesn't fancy a motorbike (at 17, I assume?), how about a dinghy: he could buy one at 15. Or some riding lessons? Skiing? I'm suggesting the "Go outdoors and do something, sonny" option. Do them while you are lithe.