Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Should my teen move his savings from this 6-month CD?
Old 05-01-2011, 05:51 AM   #1
Dryer sheet wannabe
 
Join Date: May 2007
Posts: 11
Should my teen move his savings from this 6-month CD?

My teen son (14 yrs old) and I are looking for advice on where to invest his savings. He has just over $600 in a 6-month CD at Ascencia Bank, which he opened with $500 years ago. It comes due soon, and the current rate if he renews it is 1.06%. He is fairly miserly and doesn't anticipate needing this money any time soon (probably not for years) and he has some other money available to spend on himself.

I poked around the internet a bit and the only other thing that I've come across paying 1% or more is the Ing savings account, but it looks like it has to be linked to a checking account, which he does not have. He does have a kids savings account at WF so opening checking would not be a big deal (my16 yr old has a checking there and we have found this very convenient and our checking is with WF, too).

I haven't asked him recently, but in the past he has not been interested in riskier investments, so we are just looking for safe savings ideas.

Any thoughts/ideas on good investment choices for him? TIA!
__________________

__________________
lindalou is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-01-2011, 07:40 AM   #2
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,925
lots of choices here CD Thread, Post The Best Rates You Can Find Here!--Best Nationally Available Rates--
scroll down to middle of page for listings. If you qualify , at the bottom of the list, see Patelco Credit Union 5% (only 1 yr, 1K CD ). You'll also have to check if you're eligible to join and what membership costs
https://www.patelco.org/why_join/mem...igibility.aspx
__________________

__________________
kaneohe is offline   Reply With Quote
Old 05-01-2011, 09:54 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,615
Even though you are looking for safe investing ideas, I would recommend that you go risky. It would be a great educational experience. My teen-age daughter has a Fidelity account with a few bucks in it. I had her invest in some no-commission ETFs there, so there have been no extra fees for this account.

She never looks at the account (at least after the first week), so she doesn't see the fluctuations. I'm not sure how much it is up in 13 months she's had it open, but I expect over 25%.

She learned:
1. How to open an online brokerage account.
2. How to fund it from her WF checking account
3. How to enter orders for ETFs
4. A little bit about asset allocation
5. A little bit about researching an ETF
6. Her ETFs have done quite a lot better than CDs, so she learned risk/reward stuff.
__________________
LOL! is offline   Reply With Quote
Old 05-01-2011, 12:52 PM   #4
Dryer sheet wannabe
 
Join Date: May 2007
Posts: 11
Thanks, kaneohe and LOL!

kaneohe: It doesn't look like we are eligible for the patelco credit union CD, but that would have been perfect. Thanks for linking the CD, thread - I will look it over tonight.

LOL: I will ask him about putting some of the money into ETFs. My DH and I have accounts at Vanguard, so we would have him set up an account there. I think my son would be much like your daughter - he would learn a lot from the experience, track things for a short while, and then forget about it. I would feel awful, though if the market took a dive...

Thanks again!
__________________
lindalou is offline   Reply With Quote
Old 05-01-2011, 01:04 PM   #5
Dryer sheet wannabe
 
Join Date: Feb 2011
Posts: 14
Will your son have earned income this year? Maybe he could put the money into a Roth IRA. He would have many options for investments or savings within that.
__________________
Spooky is offline   Reply With Quote
Old 05-01-2011, 01:12 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,614
Quote:
Originally Posted by LOL! View Post
Even though you are looking for safe investing ideas, I would recommend that you go risky. It would be a great educational experience. My teen-age daughter has a Fidelity account with a few bucks in it. I had her invest in some no-commission ETFs there, so there have been no extra fees for this account.

She never looks at the account (at least after the first week), so she doesn't see the fluctuations. I'm not sure how much it is up in 13 months she's had it open, but I expect over 25%.

She learned:
1. How to open an online brokerage account.
2. How to fund it from her WF checking account
3. How to enter orders for ETFs
4. A little bit about asset allocation
5. A little bit about researching an ETF
6. Her ETFs have done quite a lot better than CDs, so she learned risk/reward stuff.
I agree with all of this, but . . . it's important that he not learn the wrong lesson at this stage. He's learning the good feeling that comes from saving money and seeing that balance grow--because of his discipline in continually saving, and because the bank is adding a little. If he goes to equities now and sees his balance decrease, it can be a demotivator ("I worked six months to save that last deposit, and now it's gone! I should have just spent it, at least I'd have something for it.") It takes some maturity (that comes from experience) to understand that the balance will come up again, and he'll be rewarded. In one sense, he'll lose nothing in a downturn (he still owns the same number of shares).
If he's still learning the savings habit and it hasn't become part of his character yet, maybe hold off on the equities. Instead, maybe build a play portfolio and see how it would have done in the past. Later, maybe start a side account in addition to his CDs. Once he sees how it works, he'll want to take more risk. The few bucks he'll forfeit by being in CDs for another year or two are NOTHING compared to the importance of reinforcing the savings habit.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 05-01-2011, 05:29 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,615
Actually, I think if the market tanks that's good as well. Rather than be a de-motivator or feel bad about this advice, he will probably learn a very valuable lesson: Stock market fluctuates and things go up and down and up and down.

It would be pretty bad if the investment stayed down forever. Not so much for him, but for everyone else, since we all invest even if indirectly in the stock market. So if things drop, there seems to be plenty of time to have them recover.

In any event, he will certainly be investing in the stock market in the future, so there is no way for losses to be avoided. Get this lesson taught now.
__________________
LOL! is offline   Reply With Quote
Old 05-01-2011, 07:23 PM   #8
Full time employment: Posting here.
Ronnieboy's Avatar
 
Join Date: Feb 2008
Posts: 646
Quote:
Originally Posted by samclem View Post
("I worked six months to save that last deposit, and now it's gone! I should have just spent it, at least I'd have something for it.")
That is what my 22 y.o. said
__________________
I don't want to spend my entire life at work. I deserve more. - Want2retire aka W2R
Ronnieboy is offline   Reply With Quote
Old 05-02-2011, 12:26 AM   #9
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,616
Quote:
Originally Posted by LOL! View Post
Even though you are looking for safe investing ideas, I would recommend that you go risky. It would be a great educational experience. My teen-age daughter has a Fidelity account with a few bucks in it. I had her invest in some no-commission ETFs there, so there have been no extra fees for this account.
Quote:
Originally Posted by LOL! View Post
Actually, I think if the market tanks that's good as well. Rather than be a de-motivator or feel bad about this advice, he will probably learn a very valuable lesson: Stock market fluctuates and things go up and down and up and down.
Otar would say exactly the opposite-- that the son's first few years of savings needs to go into the college "student expenses" fund or the emergency fund. Once a young adult has a secure base (in CDs or TIPS or I bonds) then they feel more confident about branching out to take on some risk.

As for the quality of the instruction, I went to a college where both mental & physical beatings were administered daily. It was also a great educational experience, just not the one that I believe the administration had in mind.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 05-04-2011, 05:08 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 11,196
A percent or two (6-12 bucks) is not worth thinking about. Put it in the bank and get lessons elsewhere.
__________________
Al
TromboneAl is online now   Reply With Quote
Old 05-04-2011, 06:57 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
calmloki's Avatar
 
Join Date: Jan 2007
Location: Independence
Posts: 5,459
Quote:
Originally Posted by TromboneAl View Post
A percent or two (6-12 bucks) is not worth thinking about. Put it in the bank and get lessons elsewhere.

Who are you and what have you done with T-Al?


Capital One account though Costco to juice up the yield a bit more
__________________
calmloki is offline   Reply With Quote
Old 05-04-2011, 07:01 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,615
It's only $600. If it loses half its value that's just $300 which is just a week at a minimum wage job. The benefit of seeing any loss recover over time is a good one. Of course, seeing a return of 15% versus 1% is good, too.

Otar has a good point for when one is putting $10K a year into a 401(k) plan and working up to a 6-figure amount.

A kid's first few hundred of savings needs to go into a "stereo" fund or maybe Macbook Air fund. My college roommates spent all their money before they got to college, so they had nice stuff in the dorm and lots of financial aid. I saved and had no nice stuff and no financial aid.
__________________

__________________
LOL! is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Lock in electric rates or continue month-to-month? soupcxan FIRE and Money 47 08-02-2008 11:25 PM
Move over Cliff, Move Over Carlos- Here Comes Mariah! haha Other topics 4 05-29-2008 03:14 PM
Good move or Bad move?? JPatrick FIRE and Money 46 07-05-2005 08:25 PM

 

 
All times are GMT -6. The time now is 01:28 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.