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How do I go about creating a portfolio for my son?

I am helping my son put a portfolio of shares together. He is 21 and was given $50,000 by a relative. How do I go about creating a sound portfolio?

You could go to a broker and say you want shares to hold for a long time that have a history of paying good dividends — the banks, Telstra, Wesfarmers, Woolies, etc. They will lose value when a market crash comes but tell your son to buy more of these great stocks when they dive. He will still be paid dividends and try to hold about 10 stocks and tell him to build up to about 20, so he will only have a 5% exposure to any one company. Tell him to be a regular buyer of these great companies and occasionally he might get rid of one or two because the management and the industry changes, but he should try to be a collector of good companies that pay dividends and they will pay him back over the years. Of course, if he doesn’t want to be able to touch the dough until he retires, then tell him to dump it into his super fund. Putting $50,000 into super at age 21 will roll over into over a million dollars plus over 45 or so years of work.

Published on: Monday, June 23, 2014

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