16 year old wants to invest

Eyeful

1. If your son is interested in investing, it should be encouraged.
For the next 2 years he should
(a) Build up his savings, using he highest paying Savings Accounts possible.
(b) Learning about investing.  

2. Easy access & investing do not go together
Investing means putting your money at risk, so you could loose money.
Successful investing is like "watching paint dry "boring as hell. If it's exciting he is trading/speculating.

3. He should think of investing like a game.
Long term (at least 10 years) odds of winning are high 
Short term (days, weeks, months) its called "trading/speculating" odds of winning small.

4. Like any game it has rules
(a) Any money needed within 5 years should be in a Savings account, protected up to £85k.
(b) Have a "Rainy Day" Savings Account for emergencies.
(c) Use tax shelters where possible (Pensions, ISA's)
(d) Ignore investing options that come from
Cold calls 
Emails
Social media ( e.g. Facebook etc)
Talking heads via TV or newspapers
Friends down the pub.

5. Watch learn & understand from this;
https://www.kroijer.com/

6. So for the next 2 years at least,  Savings Accounts are the way to go.

eskbanker

Eyeful said:

3. He should think of investing like a game.
Long term (at least 10 years) odds of wining are high

Is he planning to invest in laying down a few cases of the good stuff in a cellar (and avoiding all associated scams)?

TheBanker

My OH's son wanted to start investing. I told him if he did some research and picked an investment, I would invest £100 of my money, and would split any profit 50/50 with him. As of today he owes me £12 I think there's a lesson in there somewhere!

Eyeful

eskbanker said:

Eyeful said:

3. He should think of investing like a game.
Long term (at least 10 years) odds of wining are high

Is he planning to invest in laying down a few cases of the good stuff in a cellar (and avoiding all associated scams)?

Thanks! must be the 5% larger I had with my dinner. That's my excuse anyway. Now corrected.

Angelica123

It would be prudent for him to build a savings pot first before thinking of investing. Easy access and investing are not synonymous. Sure he could sell his stocks at any point - but he risks doing it a huge loss. He should only consider investing money he's happy not to touch for at least 5-10 years. 

I think for now it would be useful to think about how much money he would like to be easy access and start by building a pot in an easy access savings account first. He can then start to diversify with less flexible options like regular savers and investing. 

The UK personal finance sub Reddit have a flow chart that he may find useful. 

george4064

Looks like the OP is getting mixed up with the terminology and confusing ‘investing’ with ‘saving’.

As others have pointed out, suggest you/your soon looks at children’s savings accounts. Lots of information available online (including MSE) and decent interest rates available.

artyboy

My younger DD decided she wanted to start investing, and asked me what we had our money in.

So she's gone with HMWO, using money she is comfortable she won't touch for the foreseeable (not that she's unhappy that it's up far more than her savings over the past year... the harder lesson about market volatility is yet to come)

Eyeful

george4064 said:

Looks like the OP is getting mixed up with the terminology and confusing ‘investing’ with ‘saving’.

As others have pointed out, suggest you/your soon looks at children’s savings accounts. Lots of information available online (including MSE) and decent interest rates available.

 The OP mentions stocks, shares & pensions. This suggests he does understand the the terminology.

Exodi

Eyeful said:

george4064 said:

Looks like the OP is getting mixed up with the terminology and confusing ‘investing’ with ‘saving’.

As others have pointed out, suggest you/your soon looks at children’s savings accounts. Lots of information available online (including MSE) and decent interest rates available.

 The OP mentions stocks, shares & pensions. This suggests he does understand the the terminology.

Appreciate that, but then goes on to say "he would probably prefer to have easy access rather than have the money locked away" which totally contradicts the premise that he has a full understanding of investing.

Firstly the majority of funds held within JISA (since you have to be 18 to open a S&S or GIA) can be sold with the money in your investing account within a day or two, however the funds can't be withdrawn until he is 18. If he was investing in a Junior SIPP it would obviously be much longer.

Plus even if we assume he was 18 and could withdraw the money to his bank account, it's not that investments aren't easy access, it's that they shouldn't be.

In the short term, funds bounce up and down. Over the long term, most sensible funds are generally up (else what would be the point of investing).

Having this mindset (that investments can be easy access) going in would be setting him up to fail as it would be a pretty miserable introduction to investing to have him put £1000 of his own money in one month, decide the next month he wants to take out £100 to get himself a new game or something, so he logs in and see his investments are now worth £950. The instinct from a lot of novices investors to seeing this is then to pull all of their money out during this downturn, crystallizing their losses. Everyone seems to nod when they see the line "investments can go up and down" yet many have temporary amnesia about this when they see their own investments are down.

Even if he had invested in a global equity fund (which is considered one of the least volatile equity investments), the situation I described above would have happened in both August and September.

Investments should be held for the long term, decades not days.

Buying and selling within a short time period is referred to as day-trading/speculating and is effectively gambling, which I'm sure is not the OP's intention.