thoughts for investing with a 14yo

Murphy_The_Cat

I'm currently weighing up the pros and cons about investing with my 14yo son and I'd appreciate any thoughts and advice about doing so (but not what funds to invest in, etc).

He'll have a small sum to transfer into his JISA from his Childs Trust Fund (thank you Gordon Brown) which may (or may not) go into a single fund and then my initial thought was to give him £100 per month to invest, with the idea being that he'd split this between several funds - dropping it all into a low cost passive tracker isn't really the idea.

He won't be getting the option of buying individual shares in Companies.

I'm keen for him to learn about the benefits of long term investing, whilst also experiencing first hand the good times and bad times of the world economy.
A significant part of this is going to be that he doesn't chop and change things quickly and that he does his research before amending his investments, probably on an annual basi.
I'm also keen for him to realise that unless he's actively involved in the decision process, the funding will dry up for him.

He's an active, switched on young fella, who is just about to enter the world of work in an unpleasant job which will give him a grounding in earning his weekly pay.

Separately, I'm hoping that doing this with him is something that I hope will benefit him for the rest of his life.

If anyone could help me regarding any potential pitfalls, or obvious red flags that I've missed, I'd really appreciate it.

Murph

p.s. Red Flag #1, what ever I do for him, I'll need to be prepared to do for his sibling in a couple of years time.

Reaper

Sounds OK. If you are picking fund(s) to invest in each month just be aware commission charges may lower when setting up a regular purchase for the same thing each month than making one-off individual orders. But that depends on your platform.

Lokolo

Usually I'd say stick to funds, but as a 14 year old, is there any chance to open a regular share investment?

He'll more likely be interested if he can pick individual companies that he knows of.

https://www.halifax.co.uk/sharedealing/our-accounts/regular-investing/

The only issue is that you cannot open it in his name.

ValiantSon

Murphy_The_Cat wrote: »

I'm currently weighing up the pros and cons about investing with my 14yo son and I'd appreciate any thoughts and advice about doing so (but not what funds to invest in, etc).

He'll have a small sum to transfer into his JISA from his Childs Trust Fund (thank you Gordon Brown) which may (or may not) go into a single fund and then my initial thought was to give him £100 per month to invest, with the idea being that he'd split this between several funds - dropping it all into a low cost passive tracker isn't really the idea.

I'm keen for him to learn about the benefits of long term investing, whilst also experiencing first hand the good times and bad times of the world economy. I'm also keen for him to realise that unless he's actively involved in the decision process, the funding will dry up for him.

He's an active, switched on young fella, who is just about to enter the world of work in an unpleasant job which will give him a grounding in earning his weekly pay.

Separately, I'm hoping that doing this with him is something that I hope will benefit him for the rest of his life.

If anyone could help me regarding any potential pitfalls, or obvious red flags that I've missed, I'd really appreciate it.

Murph

p.s. Red Flag #1, what ever I do for him, I'll need to be prepared to do for his sibling in a couple of years time.

If I've understood correctly, your intention is that there will be a lot active trading. I'm not convinced that this will actually give him a good understanding of smart investing. Frequent trading is likely to result in lower returns in the long run. It would make more sense to encourage him, with your help, to analyse funds and make some decisions about where to invest, and then drip-feed the £100 in every month. Limiting this investment to one or two OEICS, or a small selection of ETFs would be most sensible, but the biggest points you want him to understand, surely, are that chopping and changing investments is generally poor strategy; global and asset class diversification are important; and that there needs to be a plan for investments which doesn't lead to selling when there is a slight change.

If he were my son, I would be looking at investments in multi-asset funds.

Lokolo wrote: »

Usually I'd say stick to funds, but as a 14 year old, is there any chance to open a regular share investment?

He'll more likely be interested if he can pick individual companies that he knows of.

https://www.halifax.co.uk/sharedealing/our-accounts/regular-investing/

The only issue is that you cannot open it in his name.

I wouldn't encourage him in the view that holding individual shares is a good idea. It is extremely high risk and if he gets in that mindset then it might lead to terrible decisions later in life.

Murphy_The_Cat

Reaper wrote: »

Sounds OK. If you are picking fund(s) to invest in each month just be aware commission charges may lower when setting up a regular purchase for the same thing each month than making one-off individual orders. But that depends on your platform.

Lokolo wrote: »

Usually I'd say stick to funds, but as a 14 year old, is there any chance to open a regular share investment?

He'll more likely be interested if he can pick individual companies that he knows of.

https://www.halifax.co.uk/sharedealing/our-accounts/regular-investing/

The only issue is that you cannot open it in his name.

I've reread my original post and I can see that I wasn't as clear as I could have been.

My thought is that I'd be very strongly suggesting (actually insisting) that he set up a monthly investment in 2, 3 or 4 funds, from his monthly £100.
I'm planning on spending quite a bit of time with him whilst he/we decides which funds to invest in and then a significant part of the exercise is going to be monitoring performance, but not tinkering with where the money is invested.

I wouldn't want to buy shares and particularly wouldn't want to buy them and hold them for him in my name - I'm keen for him to see the benefits of (J)ISA investment for his future.

We'll be using the HL platform, as I find it very user friendly and suitable for the task. Their comparatively large platform fee won't be an issue for quite a while (& then can become a lesson of of its own !)

Murphy_The_Cat

ValiantSon wrote: »

If I've understood correctly, your intention is that there will be a lot active trading. I'm not convinced that this will actually give him a good understanding of smart investing. Frequent trading is likely to result in lower returns in the long run. It would make more sense to encourage him, with your help, to analyse funds and make some decisions about where to invest, and then drip-feed the £100 in every month. Limiting this investment to one or two OEICS, or a small selection of ETFs would be most sensible, but the biggest points you want him to understand, surely, are that chopping and changing investments is generally poor strategy; global and asset class diversification are important; and that there needs to be a plan for investments which doesn't lead to selling when there is a slight change.

If he were my son, I would be looking at investments in multi-asset funds.

I wouldn't encourage him in the view that holding individual shares is a good idea. It is extremely high risk and if he gets in that mindset then it might lead to terrible decisions later in life.

Hello Valiant

What you're suggesting is broadly what I was trying to say in my original, badly written post.

From his £100, I'd like to think that he would consider 4 x £25 regular monthly fund investments, rather than 1 x £100, or 2 x £50, to see the benefits/advantages of spreading his investment risk.
Multi asset is a very good idea and it may be beneficial for him to see how a multi asset fund, compares against his selections.

I'll be setting up a dummy portfolio/watch list for him to play around with, to get the jist of how things work.

Purchasing individual shares won't be an option for him.

I'm now going to edit my original post for clarity.

steampowered

It sounds like an excellent idea to me.

Do check the fees you/he are paying though. Minimum platform fees can sting for a very small portfolio like this.

Murphy_The_Cat

steampowered wrote: »

It sounds like an excellent idea to me.

Do check the fees you/he are paying though. Minimum platform fees can sting for a very small portfolio like this.

I can't see a minimum platform charge that HL will charge him, only the "standard" 0.45%,
which on the level of investment that I'm thinking of for him, isn't really significant.

Lokolo

ValiantSon wrote: »

I wouldn't encourage him in the view that holding individual shares is a good idea. It is extremely high risk and if he gets in that mindset then it might lead to terrible decisions later in life.

Murphy_The_Cat wrote: »

I've reread my original post and I can see that I wasn't as clear as I could have been.

My thought is that I'd be very strongly suggesting (actually insisting) that he set up a monthly investment in 2, 3 or 4 funds, from his monthly £100.
I'm planning on spending quite a bit of time with him whilst he/we decides which funds to invest in and then a significant part of the exercise is going to be monitoring performance, but not tinkering with where the money is invested.

I wouldn't want to buy shares and particularly wouldn't want to buy them and hold them for him in my name - I'm keen for him to see the benefits of (J)ISA investment for his future.

We'll be using the HL platform, as I find it very user friendly and suitable for the task. Their comparatively large platform fee won't be an issue for quite a while (& then can become a lesson of of its own !)

Honestly, I cannot see it working then.

The fact you are insisting he do it your way means I doubt he is that bothered about it and won't care.

You need to make it fun for him. If you want to invest for his future in funds, then you decide where to invest. If you want him to learn and experience these things, let him decide. No 14 year old is going to come home and say "Dad, I've found a great emerging markets fund to invest in.", however he may read some things in the news about a company and think "oh I want to put money into them."

To give some context.

- Aged 13 I asked for GOOG shares.
- Aged 21 I purchased numerous shares including TSLA and Greggs (which I later sold to make my house deposit)
- Aged 29 (now), I have a SIPP spread over 6 funds, my S&S ISA over 2 short term funds. I do have cash available should I want to purchase shares (as I do work in finance I am now limited in my options as I have to hold and get auth to buy/sell) but its not rare

You know your DS best but I wouldn't be surprised if he doesn't enjoy finding a fund to invest in and won't learn as much as he could.

ValiantSon

Lokolo wrote: »

Honestly, I cannot see it working then.

The fact you are insisting he do it your way means I doubt he is that bothered about it and won't care.

You need to make it fun for him. If you want to invest for his future in funds, then you decide where to invest. If you want him to learn and experience these things, let him decide. No 14 year old is going to come home and say "Dad, I've found a great emerging markets fund to invest in.", however he may read some things in the news about a company and think "oh I want to put money into them."

To give some context.

- Aged 13 I asked for GOOG shares.
- Aged 21 I purchased numerous shares including TSLA and Greggs (which I later sold to make my house deposit)
- Aged 29 (now), I have a SIPP spread over 6 funds, my S&S ISA over 2 short term funds. I do have cash available should I want to purchase shares (as I do work in finance I am now limited in my options as I have to hold and get auth to buy/sell) but its not rare

You know your DS best but I wouldn't be surprised if he doesn't enjoy finding a fund to invest in and won't learn as much as he could.

Providing structure and guidance is not inimical to learning. Indeed, without it, the learning is likely to be patchy and poorly grounded.

There is no reason why an intelligent 14 year old, with an enquiring mind, wouldn't be intrigued about strategies pertaining to investment. Buying and selling company shares is not a prerequisite for this, and it holds a significant downside (which I have already alluded to) that it could actually instil patterns of thought that are not conducive to long term success.

Murphy_The_Cat

Lokolo wrote: »

Honestly, I cannot see it working then.

The fact you are insisting he do it your way means I doubt he is that bothered about it and won't care.

You need to make it fun for him. If you want to invest for his future in funds, then you decide where to invest. If you want him to learn and experience these things, let him decide. No 14 year old is going to come home and say "Dad, I've found a great emerging markets fund to invest in.", however he may read some things in the news about a company and think "oh I want to put money into them."

To give some context.

- Aged 13 I asked for GOOG shares.
- Aged 21 I purchased numerous shares including TSLA and Greggs (which I later sold to make my house deposit)
- Aged 29 (now), I have a SIPP spread over 6 funds, my S&S ISA over 2 short term funds. I do have cash available should I want to purchase shares (as I do work in finance I am now limited in my options as I have to hold and get auth to buy/sell) but its not rare

You know your DS best but I wouldn't be surprised if he doesn't enjoy finding a fund to invest in and won't learn as much as he could.

It'll be my way in the respect that it definitely won't be shares, as a)the charges for buying small value shares will be excessive, b) I'd need to hold them in my name, which I don't want to do and c) because I'm looking at my own long term tax positions and I don't need the added complications !
But when it comes to fund choices, then it'll be down to him.


To date, he is a much better saver, than spender, so I'm very hopeful that he gets on board with it, but If he chooses not to be involved (which I'd be astonished at), then c'est la vie.:beer: