The £600 question

By THIS IS MONEY
Updated:

 

My 14-year-old son has £600 that he wants to invest for 4/5 years for capital growth. What would you recommend? KB, Leeds.

Ben Willis from Chartwell Investment replies: Your son is unable to invest into an Isa as the minimum age for eligibility is 16 for a mini cash Isa and 18 for a stocks and shares Isa. He can open a bank/building society account and with interest rates looking very attractive at the moment, then it is just a question of shopping around to find the best rates available at present. In addition, he can request that the interest is paid gross.

Another option is for you to invest the money for him into a unit trust but designate the unit trust in his name. This means that the parent(s) will be the unit-holder(s) until your son attains 18, at which point the fund will revert to his name and he will have sole access to it. However, this is a risky strategy, as there is the potential that after 4-5 years his investment value could be much lower than the amount originally invested - but it also could be much higher too.

Out of the two I would suggest the bank/building society option, as I don't believe your son will be too happy with you if you lose him money!

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