Advice on giving small amount of shares to my godson

bluep

Some advice would really be appreciated:
It's my godson's (to be) christening in December and we wanted to give him a small amount of shares in his name for the future. Although we're kind of poor now so it would probably only be £30 or so's worth (can I do this for such a low amount?), the idea is that each year as he gets older (and we're better off!), we'll give him some different ones so by the time he's 18, he'll have quite a portfolio.

I'm looking for long-term investments but don't even know where to start! How do I go about it and any advice on what to choose?

MrChips

I'm no expert in this field but....

While owning individual shares in a certain company might be a more "interesting/quirky" present, to put all your eggs in one basket (or a small number) in this way is very risky. 18 years is a very long time in investment and from reading your article, it sounds like you don't have the investment expertise/time to be able to constantly monitor the stocks you choose and buy/sell when the time is right. You may well find that some of the companies you invest in are no longer in existence in 18 years time!

You would be better advised (in my opinion) in terms of reducing risk (and hopefully increasing return) investing the money in a unit-trust/investment trust/oeic who will spread your money thinly over many different companies so there is less chance of losing it, and will (hopefully) have the expertise to "buy low, sell high".

There are hundreds of different companies to chose from, and then many different types of fund, eg uk shares, global shares, japanese shares, mixture of shares/bonds/cash.

Given the long time horizon and the fact that this is a gift and not life savings we are talking about, you can probably afford to go with a relatively high risk strategy (i.e. all shares) and reinvest any dividend income.

The only slight drawback with getting the professionals to invest your money for you is the fees they will charge, but you can shop around and go for an index-tracker which should charge minimal fees. The £30 initial investment may be a problem as well as a lot of companies might insist on a higher starting lump sum. But I'm sure if you shop around you'll find something appropriate - someone else on here might be able to recommend something. Check Martin's investment pages too.

Once it is up and running, you should be able to add more money to it whenever you like.

Hope you find this useful, pensions is more my area of expertise (i.e. investment advice to a 50 year old than a new born!)

competitionscafe

If you try and invest £30 in shares you would lose half that amount in charges (stamp duty, dealing charges, etc) so they would have to double just so you could get your money back (and that's not counting the cost of selling them). It's not really an option for such small amounts.

Best idea might be to try and accumulate several £30 amounts - there are some investment trusts which will accept a lump sum investment of as little as £250 with very low charges for buying. http://www.aitc.co.uk/

Or save up the minimum of £100 for some premium bonds (they might get lucky and win a million)
http://www.nsandi.com/products/pb/otherwaystoapply.jsp#post

Robert_Sterling_3

You could put £30 into an equity based Child Trust Fund.

Noozan

I second what competitionscafe has said regarding most of the initial investment being eaten up in fees.

Have you thought about buying a Childrens Bonus Bond from the Post Office. You can get them in £25 increments, interest is added every year and you get a bonus on the 5th year.

cheerfulcat

bluep wrote:

Some advice would really be appreciated:
It's my godson's (to be) christening in December and we wanted to give him a small amount of shares in his name for the future. Although we're kind of poor now so it would probably only be £30 or so's worth (can I do this for such a low amount?), the idea is that each year as he gets older (and we're better off!), we'll give him some different ones so by the time he's 18, he'll have quite a portfolio.

I'm looking for long-term investments but don't even know where to start! How do I go about it and any advice on what to choose?

Hi there,

Giving your godson shares is not an option, I'm afraid; he needs to be 18 before he can hold shares in his own name. In any case, as others have pointed out, it's too small a sum. I second the CTF idea :-)