Money Magazine default image

Funds fit for teenage investors

Sep 03, 2013

Which mutual fund should my teenage daughter invest in? She has $1,400 and won't need the cash for at least five years. -- Kathy, Michigan.

"At that stage in life, $1,400 seems like all the money in the world," says financial planner Tim Maurer, co-author of The Ultimate Financial Plan. So don't risk big losses that could scare her away from the market forever.

A balanced fund -- one holding both stocks and bonds -- should provide smoother growth than pure stocks.

A good pick: Vanguard Star , which comprises 11 Vanguard funds and holds everything from international stocks to short-term bonds. The minimum buy-in is $1,000 -- unlike many other funds, low enough for your situation.

While Maurer terms Star relatively safe, your daughter can cut her risk further by putting some of her cash in a money-market fund instead.

All products and services featured are based solely on editorial selection. MONEY may receive compensation for some links to products and services on this website.

Quotes delayed at least 15 minutes. Market data provided by Interactive Data. ETF and Mutual Fund data provided by Morningstar, Inc. Dow Jones Terms & Conditions: http://www.djindexes.com/mdsidx/html/tandc/indexestandcs.html. S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions