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Investment Strategy for Grandchild?


Jim & Alice

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First & only grandchild. Getting ready to put $1,000 into 'something'... Not a 529, tho. Have an appointment with longtime friend & Financial Adviser in a few days...

 

Frankly, in today's economy, I am feeling clueless. Any advice from folks on how to invest this money?

Thanks,

Jim

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If past history predicts the future (ha ha) then a good suggestion is to put it in the market.

Myself, that is what I would do and infact is what i have done.

The market will recover, but when, and will it go lower? I dont know your investment time frame, but for me, 5 years or longer would have me in the market with new money.

Best investment overall has been small market index fund.

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FWIW Jim, personally we like Vanguard Index funds with it's ultra low expenses, as they could eat up any growth or devalue it more than necessary - we especially like those that mimic the S&P500 typically.

 

With 2016 being the worst start to a new year in the markets since 1932, you might want to watch for a while rather than try to catch a falling knife and buy on the curl back up of whatever it is you decide to invest in ;).

 

As a different perspective, over the years heard a lot of folks invested for children in stocks that might be of interest to them to follow whilst young and led to an interest in them continuing to invest as they got older - such as Disney, or a favourite but solidly established/profitable consistently store/company that appeals to them because they buy it's products.

 

Whatever it is you decide to invest in (reinvestment of reliable aristocrat company dividends is another consideration for further growth), just make sure you understand in writing exactly what costs are involved so it doesn't erode your caring intentions. Likewise if using a Financial Advisor make sure you clearly know exactly how they are compensated.

 

It's wonderful what you are doing, and we look forward to doing the same for our grandchildren if we are hopefully blessed with them one day

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Is this going to be a one time deposit or are you planning on making furture deposits. If a one time deposit, for long term investments the stock market, over a 10 year period has always performed well, but there is no guarantee in the future. If you want a more conservative investment with some guarantees look at insurance products like an annuity. The best approach is to use dollar cost averaging, which is depositing a set amount monthly over a period of time into something like a mutual fund.

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