Don't Waste Damages Cash On A Car
Sun Herald
Sunday February 4, 2001
MY son, upon turning 18 in March, will receive about $25,000 from a damages trust which has been with the Public Trustee since he was aged about 8. What would be his best options for investment? No doubt he'll want to buy a reliable car, but I'd like to see him put away the rest.
AD, Cooma
If your son takes money out of the $25,000 to buy a reliable car he is likely to use a good portion of the money and it is unlikely he will be able to see the rest grow to become sufficiently large to act as a home deposit. As a rule of thumb, a compounding investment earning about 7pc pa will double in 10 years.
Why not get him to buy his car out of current income, using a loan if necessary? Paying off the loan might convince him to drive carefully and look after the car.
Invest the money in a diversified fund, such as the Colonial First State Diversified Fund.
© 2001 Sun Herald
