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I'm 14, and a relative has recently died, leaving me ~£4000 in their will. My parents have said they would recommend me investing it in Premium Bonds, but I was wondering if there were any investment options open to me (14 years old, in the UK) that were as safe as Premium Bonds, but offer a better return. I'm up for have reduced access to the money for up to 5 years, but I'm not looking for a 25 year investment plan or anything.

Thanks in advance!

  • This question is opinion based and should be closed. – user9822 Mar 7 '15 at 20:44
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    These days, premium bonds offer a terrible rate of return, even compared to a normal bank account. Your best bet might be a simple savings account. – Steve Melnikoff Mar 7 '15 at 23:24
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    I don't understand how this is opinion based @MarkDoony. I am asking for a fact-and-figure answer: what will make me most money over this period with this money, in my current predicament. – Isaac Woods Mar 8 '15 at 14:04
  • Okay, thanks @SteveMelnikoff, that's very helpful! I'll look into different savings accounts to see what rates they offer. – Isaac Woods Mar 8 '15 at 14:22
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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.

  • Ok; thanks very much! With the current state of the stock market and the general election coming up, a mutual fund wouldn't be a great idea, I've assessed. The article you linked was very informative and I think a fixed rate bond is the way to go - thanks very much once again for your help! – Isaac Woods Mar 8 '15 at 14:44
  • @IsaacWoods be carefull with bonds you can lose capital - oh and avoid the Mutual funds offered by banks on the high street. – Pepone Mar 8 '15 at 16:44
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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

  • Age 14 as of now means a birthdate in the approx range approx Mar 2000-Mar 2001, so too old for a CTF – AakashM Mar 11 '15 at 14:25
  • @AakashM ty Junior ISA it is then – Pepone Mar 11 '15 at 21:52
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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.

  • Okay, thanks very much. I'll look into guaranteed reserves, thanks! – Isaac Woods Mar 11 '15 at 16:59
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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).

  • It is important to note that it "may" give you a decent return, not "will". You cannot, in most cases, get more return for the same risk. But you can get a larger return with what may be an acceptable amount of risk. – jmg229 Mar 11 '15 at 16:20
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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.)

  • There's no indication whatsoever that the OP is not planning on doing this already, but this isn't what he's asking about. – ChrisInEdmonton Mar 8 '15 at 14:04
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    I'm afraid I'm not asking for this: I already have a part-time job and am fine education-wise. I was more asking for a Premium-Bond like solution for investing the money. – Isaac Woods Mar 8 '15 at 14:06
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    OP asked what a 14-year-old could invest in. There isn't anything else. A parent can invest your money, but at that point this question is no longer a good one (as it is vaugue and will result in debate and opinion.) I stand by my answer as it addressed the age. – Hamhot Ptonel Mar 9 '15 at 2:22
  • Other than savings, which is hardly worth the 10-15 return per month compared to a good educational hobby. – Hamhot Ptonel Mar 9 '15 at 2:31

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