AboutPaul Henneman Expertise I can answer any questions on investment strategies. Specifically, my expertise lies in long term investment strategies designed to beat market performance while reducing risk. Not get rich quick schemes, but solid investing strategies.
Experience
Past/Present clients CBSMarketWatch, Hoovers, Multex, Yahoo Finance, Zacks, Earthlink Finance, several large institutions and hedge funds, over 30,000 subscribers to www.ValuEngine.com
Question My 10 year old son has made it a point to save most if not all of the money he usually receives. I want to put this in some type of account or fund for him, so that he can get the most out of his savings. What would you recommend as a safe yet high return option for him and his money?
Answer Bill,
Thank you for your question! I can't say enough how much respect I have for what you are doing. So many people never look to the future. You are getting your son off on the right foot, this could serve as a very valuable lesson for the future!
I strongly recommend a money market account. The return is low, about 2% is the best that you can expect. But it is a perfectly safe investment, there is no risk. Anything else would require risk, where your son could actually lose money in the short term. The best money market account I am aware of is www.NetBank.com It is federally insured up to $100,000, and offers the highest interest I have seen for this type of account. They have a website with information at www.NetBank.com
If you do think it is ok to assume higher risk, I would then suggest a mutual fund. Investing in several diverse mutual funds is always better than in a single one, but this depends upon how much is involved. You can always start with one and add a second and third as the funds grow down the road. There are great index funds out there that parallel the general market, and would average 10 to 12% annual return. This is much, much greater than a money market account! But that is average performance, some years will be better and some worse. There will even be years where the funds could drop in value, as much as 20 to 40% during a severe depression. The best website I am aware of to research mutual funds is www. morningstar.com
It is a tough decision. Your son is so young, and the way returns compile over time, I would invest in mutual funds if I were in your position. But this depends upon the type of person you are. Safe investments are fine, just much lower returns. But they money is always there.
I hope this helps! Please do not hesitate to follow up with me if I can be of any further assistance,
Sincerely,
Paul Henneman
President
ValuEngine, Inc.
www.ValuEngine.com
