Investment Options for 14-year old?
As you are 14, you cannot legally buy premium bonds yourself. Your parents could buy them and hold them for you, mind you. That said, I'm not a fan of premium bonds. They are a rather weird combination of a savings account and a lottery. Most likely, you'll receive far less than the standard interest rate you'd get from a savings account. Sure, they may pay off, but they probably won't. What I would suggest, given that you expect to need the money in five years, is simply place it in a savings account. Shop around for the best interest rate you can find. This article lists interest rates, though you'll want to confirm that it is up to date. There are other investment options. You could invest in a mutual fund which tracks the stock market or the bond market, for example. On average, that'll give you a higher rate of return. But there's more risk, and as you want the money in five years, I'd be uncomfortable recommending that at this time. If you were looking at investing for 25 years, that'd be a no-brainer. But it's a bit risky for 5 years. Your investment may go down, and that's not something I'd have been happy with when I was 14. There may be some other options specific to the UK which I don't know about. If so, hopefully someone else will chime in. A Junior ISA might be one option if you are eligible do you have a CTF? (child trust fund) though the rules are changing shortly to allow those with CTF's to move to a junior ISA. JISA are yielding about 3.5% at the moment  Or as you are so young you could invest in one or two of the big Generalist Investment trusts (Wittan, Lowland) - you might need an adult open this and it would be held via a trust for you.  Or thinking really far ahead you could start a pension with say 50% of the lumpsum When I was about your age I had the same kind of situation. I asked my bank about possible options and one of them was a guaranteed reserve. You lock the money away for a certain amount of years and you get a guaranteed amount of interest on it. I don't know what the current rate is at the moment so you'll have to ask your bank. The good thing about premium bonds is that you can access the money quickly at any time so you could always get premium bonds until you decide what to do with it. If I were you though, I'd make sure my parents didn't have control over my money. Whatever option you choose, keep your money in your name. 5 years is a reasonable time period to invest in a stock which will give you a decent return and will generally not lose too much value except in case of 2008 kinda downturn. I would advise you to invest in a large cap stock/s like BP, Royal Dutch or HSBC (Your parents of course can buy them for you). A fourteen-year-old can invest a few thousand into commuting to a part-time job or an education. If you can wait five years for a couple hundred you can wait two to four years for a car (or gas money) or a class (or some textbooks.)
"Well, I understand this forum is about money but I think you would be far better off if you invest the money in your daughters education or something similar that can bring much more significant future gains. I am a big fan of compound interest and investing in stocks but $700 sitting until she's 21 wont grow into a significant amount. When she's 21, what would you ""hope"" she'd spend the money on? something valuable like education right? so why don't you take the first step now so she will get a much bigger return than the monitory value. If I were you I'd invest in a home library or something similar." "In my opinion, the key variable for you (and others) is not age, but ""vintage."" Your ""age"" suggests that you were born in the mid-1980s, in the middle of a bull market. The most remunerative investing periods for you are likely to be in your childhood (past) and middle age (forties and early fifties). Also your, ""old-old"" period (around age 80, in the 2060s), if you live that long. For now, you can, and perhaps should invest cautiously, like today's 40-year olds, with a heavy emphasis on bonds. The main difference between you and them is that you can shift to stocks in about ten years, in your mid to late 30s, while they will find it harder to do so when approaching old age." "What you're asking for is a short-term, large return investment. When looking for big returns in a short period of time, risk is inevitable. The more risk you are willing to assume, the higher your potential returns. Of course, the flip is is that the higher your risk, the higher the potential to lose all your money! Since this is an exercise for school (and not real money and not your life savings) your best bet is to ""go big or go home"". You can safely assume 100% risk! Don't look for value stocks, dividend stocks, or anything that pays a steady return over a long period of time. Instead, look for something risky that has the potential of going up, up, up in the next few months. Are you allowed to trade options in your fake portfolio? Options can have big risk and big reward potential. Penny stocks are super volatile, too. Do some research, look for a fad. In other words, you will most likely lose it all. But you get a little lucky, you could win this thing outright by making some risky investments. A 5% chance of winning $3000 vs 95% of going broke may be pretty good odds if everyone else is value investing for just a few months. You will need to get lucky. Go big or go home!" "Put it in a Vanguard fund with 80% VTI and 20% VXUS. That's what you'll let set for 10-15 years. For somebody that is totally new to investing, use ""play money"" in the stock market. It's easy for young people to get dreams of glory and blow it all on some stock tip they've seen on Twitter." Investing is really about learning your own comfort level.  You will make money and lose money. You will make mistakes but you will also learn a great deal. First off, invest in your own financial knowledge, this doesn't require capital at all but a commitment. No one will watch or care for your own money better than yourself. Read books, and follow some companies in a Google Finance virtual portfolio. Track how they're doing over time - you can do this as a virtual portfolio without actually spending or losing money.  Have you ever invested before? What is your knowledge level? Investing long term is about trying to balance risk while reducing losses and trying not to get screwed along the way (by people).  My personal advice: Go to an independent financial planner, go to one that charges you per hour only. Financial planners that don't charge you hourly get paid in commissions. They will be biased to sell you what puts the most money in their pockets. Do not go to the banks investment people, they are employed by the banks who have sales and quota requirements to have you invest and push their own investment vehicles like mutual funds. Take $15k to the financial planner and see what they suggest. Keep the other $5K in something slow and boring and $1k under your mattress in actual cash as an emergency. While you're young, compound interest is the magic that will make that $25k increase hand over fist in time. But you need to have it consistently make money. I'm young too and more risk tolerant because I have time. While I get older I can start to scale back my risk because I'm nearing retirement and preserve instead of try to make returns. Since your child is 2, he has a long time horizon for investment.  Assuming the savings will be used at age 19, that's 17 years.  So, I think your best bet is to invest primarily in equities (i.e. stock-based funds) and inside an RESP. Why equities?  Historically, equities have outperformed debt and cash over longer time periods.  But, equities can be volatile in the short term. So, do purchase some fixed-income investments (e.g. 30% government bonds and money market funds), and do also spread your equity money around as well -- e.g. buy some international funds in addition to Canadian funds.  Rebalance every year, and as your child gets closer to university age, start shifting some assets out of equities and into fixed-income, to reduce risk.  You don't want the portfolio torpedoed by an economic crisis the year before the money is required! Next, why inside an RESP? Finally... what if your kid doesn't attend post-secondary education?  First, you should probably get a Family RESP, not a Group RESP.  Group RESPs have strict rules and may forfeit contributions if your kid doesn't attend.  Have a look at Choosing the Right RESP and Canadian Capitalist's post The Pros and Cons of Group RESP Plans. In a Family plan, if none of your kids end up attending post-secondary education, then you forfeit the government match money -- the feds get it back through a 20% surtax on withdrawals.  But,  you'll have the option of rolling over remaining funds into your RRSP, if you have room. Are you working? Does your employer offer a 401(k) and if so, is there any match?  Saving should be taught to kids at the same time they are old enough to get an allowance. There are many numbers tossed around, but 10% is a start for any new saver. If a college graduate can start by saving even 15%, better still. If you find that the 10% is too much, just start with what you can spare, and work to build that up over time, perhaps by splitting any future raises, half going toward savings, half to spending.  Good luck. Edit  - my 12 yr old made good money this summer baby sitting. I'm opening a Roth IRA for her. A 10 yr head start on her retirement savings. Edit (Jan-2013) - she's 14 now, 3 deposits to the Roth total $6000, and she's planning to up the number this year. Her goal is to have $50K saved in her Roth by the time she graduates college.  Edit, by request (July-2017) 18, and off to college next month. Just under $24K, all invested in an S&P low cost index. We are planning to continue deposits of $4-$5K/yr, so the $50K is still a good goal. "Are there other options I haven't thought of? Mutual funds, stocks, bonds. To buy and sell these you don't need a lawyer, a real-estate broker and a banker. Much more flexible than owning real estate. Edit: Re Option 3: With no knowledge of investing the first thing you should do is read a few books. The second thing you should do is invest in mutual funds (and/or ETFs) that track an index, such as the FTSE graph that was posted. Index funds are the safest way to invest for those with no experience. With the substantial amount that you are considering investing it would also be wise to do it gradually. Look up ""dollar cost averaging.""" Waiting for the next economic downturn probably isn't the best plan at this point. While it could happen tomorrow, you may end up waiting a long time. If you would prefer not to think much about your investment and just let them grow then mutual funds are a really good option. Make sure you research them before you buy into any and make sure to diversify, as in buy into a lot of different mutual funds that cover different parts of the market. If you want to be more active in investing then start researching the market and stick to industries you have  very good understanding of. It's tough to invest in a market you know nothing about. I'd suggest putting at least some of that into a retirement savings account for long term growth. Make sure you look at both your short term and long term goals. Letting an investment mature from age 20 through to retirement will net you plenty of compound interest but don't forget about your short term goals like possible cars, houses and families. Do as much research as you can and you will be fine! As a young investor, you should know that the big secret is that profitable long term investing is boring.  It is is not buying one day and selling the next and keeping very close tabs on your investments and jumping on the computer and going 'Buy!' , 'Sell'. That makes brokers rich, but not you. So look at investments but not everyday and find something else that's exciting, whether it's dirt biking or WOW or competitive python coding.  As a 19 year old, you have a ton of time and you don't need to swing for the fences and make 50% or 30% or even 20% returns every year to do well. And you don't have to pick the best performing stocks, and if you do, you don;t have to buy them at their lowest or sell them at their highest.  Go read A Random Walk's guide to Investing by Burton Malkiel and The only Investment Guide you'll ever need by Andrew Tobias. Buy them at used bookstores because it's cheaper that way.  And if you want more excitement read You Can Be  a Stock Market Genius by Joel GreenBlatt, One up On Wall Street By Peter Lynch, something by Warren Buffet and if you want to be really whacked, read Fooled By Randomness by Nassim Nicholas Talib, But never forget about Tobias and Malkiel, invest a regular amount of money every month from 19 to 65 according to what they write and you'll be a wealthy guy by 65. A safe investment would be to get a 5-year CD from Ally Bank.  No minimum deposit and no monthly maintenance fees.  1.74% APY at the moment.  I would choose a 5-year CD since the early withdrawal penalty is only 60 days interest, which will be negligible for a $100 investment and increasing the term significantly increases your interest rate. Regarding other suggestions: Even if you find a way purchase stock commission free, it will probably cost a $5-$10 commission to sell, wiping out probably a year or two of gains.  Also, I-Bonds must be held for a year minimum, which is problematic. At the end of the day, it's probably not really worth your time to do any of these.  $2 a year or $5 a year, it's still fairly insignificant and your time is surely worth more than that. You're losing money. And a lot of it. Consider this: the inflation is 2-4% a year (officially, depending on your spending pattern your own rate might be quite higher). You earn about 1/2%. I.e.: You're losing 3% a year. Guaranteed. You can do much better without any additional risk. 0.1% on savings account? Why not 0.9%? On-line savings account (Ally, CapitalOne-360, American Express, E*Trade, etc) give much higher rates than what you have. Current Ally rates are 0.9% on a regular savings account. 9 times more than what you have, with no additional risk: its a FDIC insured deposit. You can get a slightly higher rate with CDs (0.97% at the same bank for 12 months deposit). IRA - why is it in CD's? Its the longest term investment you have, that's where you can and should take risks, to maximize your compounding returns. Not doing that is actually more risky to you because you're guaranteeing compounding loss, of the said 3% a year. On average, more volatile stock investments have shown to be not losing money over periods of decades, even if they do lose money over shorter periods. Rental - if you can buy a property that you would pay the same amount of money for as for a comparable rental - you should definitely buy. Your debt will be secured by the property, and since you're paying the same amount or less - you're earning the equity. There's no risk here, just benefits, which again you chose to forgo. In the worst case if you default and walk away from the property you lost exactly (or less) what you would have paid for a rental anyway. 14 years old car may be cheaper than 4 years old to buy, but consider the maintenance, licensing and repairs - will it not some up to more than the difference? In my experience - it is likely to. Bottom line - you think you're risk averse, but you're exactly the opposite of that. Some banks and credit unions have IRA accounts. They pay interest like a savings account or a CD but they are an IRA. After the 15th you can roll them over into a IRA at one of the big investment companies so you can get invest in an index or Target Retirement Fund. But it is not too late. Opening an account at one of the big companies takes ten minutes (you need to know your social security number and your bank account info) they can pull it out of your bank account. I helped my kid do the same thing this week. We went on-line Tuesday night, and they pulled the money from his account on Thursday morning. Also know which type you want (Roth or regular) before you start. Also make sure you specify that the money is for 2013 not 2014. "For ""real"" investing I would usually recommend mutual funds.  But if you are trying to teach a kid about investing, I would recommend they choose individual stocks.   That will give them a great opportunity to follow the companies they bought in the news.  It also gives you an opportunity to sit down with them periodically and discuss their companies performance, economic news, etc. and how those things play into stock prices." See an advisor but with a healthy level of skepticism. Question why they make the recommendations they do.  If you have debt, no the interest rate.  If CAGR &gt; interest, invest instead of immediately paying off debt.  In reality, invest the most you can.   You're young and try to live your life like you would've without the inheritance.  The longer you let that money grow in an investment untouched (and honestly that amount of money is a huge gift/surprise at your age) the more you'll thank yourself in the end.  Max out a Roth IRA - your advisor can explain that to you.  Also, you can afford to invest super aggressively since you're so young.  You could also find a variable life insurance contract to act like a Roth and grow a death benefit to continue leaving a legacy in your family line.  Sorry for the advisory vomit.  I'm sorry for the loss that led to this inheritance, but that's a great opportunity and there are a ton of options and none of them are wrong.  Best of luck!