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The teenagers investing in the stock market – with help from Dad

Ross Barden and sons Ruben and Ezra
Ross Barden gives his sons plenty of freedom to choose how to invest (L-R: Reuben, Ross, Ezra) - Andrew Hasson

Three years ago, teenagers Noah and Ezra invested in cryptocurrency, a decision Ezra describes as “a bit like gambling”. They did so with the help of their dad, after doing some research of their own.

Born into a family without generational wealth, their father, Ross Barden, wanted to instill his passion for investing into his family. Now his sons Noah, 18, Ezra, 16 and Reuben, 14, invest their own money in funds and shares.

Many of today’s teenagers are very financially savvy, and are increasingly investing their pocket money and birthday cash in global markets, taking an active role in growing their nest eggs.

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Helped by their parents, they’re investing with bigger plans in mind, such as saving for a deposit on a house or building a pot big enough to enable them to retire early.

‘My dad trusts me to make my own decisions’

Noah says they typically err on the side of caution and have been happy to take the lead from their father, although they both stress that he has given them lots of freedom to choose.

“I tend to always buy index funds like the S&P 500 or the FTSE 100, just because generally from what I’ve seen in my own portfolio it’s a safer investment,” Noah says. “My dad trusts me to make my own decisions.”

The younger boys have a reasonable amount of autonomy when it comes to choosing what to do with the money, and how much of their income they invest.

“It’s something we talk about all the time,” Ross says.

Ross Barden and two of his sons, Noah, 18 (white top), and Ruben, 14 (blue top).
'At the moment I give the money to my dad and he invests it for me' says Ezra, 18, who is keen to take more control - Andrew Hasson

Ezra is keen to take more control as soon as he’s 18.

“At the moment I give the money to my dad and he invests it for me, and takes me through the companies [that he’s investing in], but I’d like to start doing more of my own personal research.

“I want to invest in separate stocks and shares and be able to play about a bit, and get more knowledge of the market.”

Ross adds: “Ezra is doing a barber’s apprenticeship and has just negotiated an increased salary with his boss, so we talked about how much of that increase he can now put over to investing.

“He wants to put some money towards a holiday and perhaps get himself some nice clothes…It’s his money at the end of the day; I’m just a mentor or guide.”

Rather than focusing on particular sectors, Ezra says he’s keen to back “anything with potential” once he’s got a bit more autonomy, and criticises what he sees as a “get rich quick” attitude among his peers.

“I’ve got a long-term view – this is my safety net,” he explains.

Ezra may be something of an outlier among his peers.

Research by investment firm Charles Schwab found that members of Generation Z – those born between 1997 and 2012 – are investing more boldly, and “demonstrating trader-like behaviours”.

It found that they are changing their investments more often, with 58pc tweaking their portfolio every month, compared to 38pc of older investors. It also found younger investors were more interested in investing in riskier instruments such as futures and fractional shares.

Ross adds: “We don’t pick stocks, we just invest in the whole market. At the moment we’re favouring the FTSE global all-cap excluding UK, because I don’t think the UK economy is doing well. That seems to be outperforming the ones that include UK stocks.”

He gained much of his knowledge from the free online course Rebel Finance School, and his ex-wife and mum to their three boys runs a business called My Divorce Doula, which in part helps couples to separate their finances well.

Avoiding the ‘wild west’ of social media

Sarah Coles, head of personal finance at Hargreaves Lansdown, says it is worth talking to young people about investing to avoid them gaining all of their knowledge from the “wild west” of social media.

According to Hargreaves Lansdown, the average Junior Isa holder has £16,291 in their account when it matures, so preparing teens for the moment when the money becomes theirs to manage is vital.

“Some 18-year-olds are thoughtful and responsible adults, and some are liabilities who can’t be left alone with a toaster without serious consequences,” Sarah says. “In fact, having the Junior Isa alone can make a real difference to developing a mature attitude to money.”

Encouraging young people to make wise financial choices from a young age, such as giving them pocket money, setting money-based goals, and letting them make low-stakes mistakes, help foster financial independence, she says.

“The vast majority of HL clients whose Junior Isas roll into Isas still have money invested in them a year later,” Sarah points out.

Dan Coatsworth, of AJ Bell, said parents should get a child involved in growing their money and let them pick their own investments. “This should make them more enthusiastic about how their money could grow in value and feel as if they are in charge,” he said.

“A good starting point is to get them to make a list of their favourite activities or things they couldn’t live without. For someone of primary school age, it might be the companies which make their toys, favourite meals or drinks, or the creators of their video games.

“Secondary school children might list the company which makes their mobile phone, the manufacturer of sporting equipment they use in the park, the fashion sellers they love to frequent or the streaming platforms they use.”

‘It’s never too early to start’

Mike and sebastian hudson
Mike Hudson with his son Sebastian, who has a particular interest in investing in science companies - John Lawrence

Mike Hudson, a biologist from Buckinghamshire, has been investing for more than 25 years. He set up a Junior Isa for his son Sebastian, who is 14, principally to save his birthday and Christmas money.

“We started six or seven years ago when he realised he had more money than he could spend on sweets or Lego,” Mike explains. “From an investment point of view, it’s really never too early to start.”

The only straightforward way for people aged under 18 to access the investment market is for their parents to open a stocks and shares Junior Isa for them, which they  – or anyone else – can then pay into.

You can pay up to £9,000 in any tax year into Junior Isas, which can be split across both cash and stocks and shares accounts. When the child turns 18, the Isas will automatically roll over into an adult Isa without any tax implications or hassle.

There are hundreds of providers in the market that offer stocks and shares Junior Isas, most of which allow you to choose a risk profile. Some offer ready-made portfolios, while others give you a level of control over which shares you want to invest in.

Sebastian invests with Hargreaves Lansdown and has developed a particular interest in science companies.

“He has some investment in innovation companies, such as Imperial [College Innovations], which offer long-term investing,” says Mike.

“And then at the other end of the spectrum he has money in the Brunner Investment Trust, and that’s been one of his best ongoing investments because it’s a great portfolio across some of the world’s biggest and strongest companies, and it’s quite diversified.”

With time on his side, Sebastian can afford to invest in a mix of products, and has long-term goals in mind.

“I would like a deposit on a house, that sort of thing, but it’s also interesting short-term to watch how the value changes over time,” the teenager says. “It’s generally more worthwhile than just keeping your money in a savings account.”

It’s not a regular topic of conversation among his friends, he admits, but teenagers have more access than ever to information about investing via social media platforms such as TikTok.

“Investing is a good way to build family wealth,” Ross adds. “But ultimately I would love my kids to have financial freedom – to do the job because they want to do it, not because it’s the highest-paying job. That’s worth everything.”