? for people with young kids

[sue78]

Hello again,

Just wondering whether people here have some sort of investment strategy set up for their kids? for example - trust fund, education fund, properties etc

What's the best strategy for these sort of things? If i want to buy an IP for my baby, should I put it in his name? there's no tax benefit but I can apply for first home owners grant? providing we live in it first.

Or should we just not bother since when we die, they will inherit all our estate anyway?

Do you think it's better for them to inherit our estate when we die, or should we give it to them when they need it most? i.e when they get married, have kids, need $ and house?

Or do you think that they should tough it our like our generation did?

Do you guys invest for your benefit or for your children's? because for me, my baby motivates me. Sometimes, I think everything we do in regards to property is really for him. Wealth/assets, isn't the most important thing to us as it's not something we can take to our grave,

In regards to the education fund, we will probably do something through an IP as when he's old enough, we can use the equity to pay for his education. I don't see the point in putting $20k in a savings account. What do you think?

also, would you tell your child he has a trust fund? I still expect our kids to get part time jobs, buy their own car, move out and support themselves. We don't want to spoil them at all.

 

[lizzie]

by the time i met my hubby his three kids already had an asg fund each - biggest waste of money i ever saw. for what he and his ex spent putting into the fund they could've bought a couple of ips 12 years ago and enjoyed two booms of cg.

therefore, when junior turns 5 (she's currently 2.11) we'll buy a unit in trust for her so that she can live in it whilst at uni, rent it out or sell it once she's finished higher education to pay off her hecs and perhaps travel overseas - the choice will be hers, but hopefully by that time she will use it to buy more ip's.

as for structure - probably set it up in it's own trust so there are no stamp duty costs etc to transfer ownership of the trust to her name when she reaches her majority.

 

[Gee Cee]

Adoption

Lizzy. Just to let you know that i am available for adoption

Gee Cee

47. 1

 

[skater]

I don't plan on giving anything to the kids until I die. The reason for this is simple. I believe they will appreciate it so much more if they have to do it for themselves. I will help them, motivate them, teach them, encourage them, even let them use my equity via loan if needs be, but at the end of the day, they have to do it for themselves. I hope that by doing this, they in turn will teach their own offspring to do the same. My belief is that if you give them everything on a platter you will only breed lazy offspring who want something for nothing.

My eldest is 16 & has been working part time since she was 13. She puts half of all she earns into an account that she cannot touch to fund the deposit on her first property. She struggled with this at first, but now she knows that she has a nest egg that grows each week & is excited by the fact that she will be miles ahead of her peers in just a few years. The thing she loves about it (now) is that she knows she did this herself without us putting anything in.

Youngest daughter (14) has been working for the last 6 months & is doing the same. They have learnt through us all about investing at home & both intend to do the same when they are able to. They both know they will have to do it for themselves & both know they will have us to support them as they learn.

 

[lizzie]

Lizzy. Just to let you know that i am available for adoption

Gee Cee

47. 1

errrrr - bit hard explaining to society a kid 10 years older than myself. then again, i would look a pretty young mum!

skater - the only thing junior would get would be this one property, probably on her 18th or 21st birthday. our reasoning is that she will probably be saddled with some form of higher education cost that could be prohibitive (looking at what the current 2 are already looking at for uni) and since hubby and i went thru the system when higher education was free, or they paid you to go, i think it only fair for the next generation to have some help. in some ways it is saving us from having to help her out with hecs, but also gives her a headstart or additional boost ... she will definately be encourage to invest herself. my parents gave each of us kids a large-ish deposit for our own homes when we married, so it is something along the same vein - not handing anything on a platter, but more a form of cg that will benefit both parties in the future.

 

[quoll]

I don't plan on giving anything to the kids until I die. The reason for this is simple. I believe they will appreciate it so much more if they have to do it for themselves. I will help them, motivate them, teach them, encourage them, even let them use my equity via loan if needs be, but at the end of the day, they have to do it for themselves. I hope that by doing this, they in turn will teach their own offspring to do the same. My belief is that if you give them everything on a platter you will only breed lazy offspring who want something for nothing.

Agree, whole heartedly, you need to teach the kids, help the kids but not hand them the cash. The millionaire next door book really opened my eyes to the difference between helping and hamstringing your kids, the harder path is to help as you have to withhold the cash and let them do it themselves.

So for me, I ain't buying them a unit or house. They cas save and do it themselves, once they get the loan and have a go I might help a little but if you give them a gift they don't expect it will be a lot more satisfying than having to give them cash every year because they spend more than they earn.

cheers
quoll

 

[kissfan]

I'm also in the 'give motivation and education rather than cash' camp.

Regards
Marty

 

[Twitch]

I'm investing so that I can afford the private school fees for my kids. Once they finish school that stream of money is going to fund my and my wifes needs, not theirs. An education at a top private school is IMHO one of the best financial gifts I can give my kids.

 

[redwing]

I believe thats one of the benefits in having your assets in Trusts..

Succession Planning

 

[manny]

Well I've got a 4 year old & a 6 year old & have a managed fund for each of them setup at birth (averaged around 20% pa since purchased, in Colonial Imputation Fund & recently bought into the Navra Fund) & a share portfolio (additional shares purchsaed as they do save up additional money from gifts, etc. & are held in a Family Trust)... This seems to be working well for them atm, may consider an IP (or two) down the track for them when they do get a little older...

Cheers,

Manny.

 

[Lily House]

I have two little darlings, aged nearly 2 and 5.

Lizzie - how wonderful for your daughter. I would love to do something like that but buying mine a property is just not a financial possiblilty at this stage. I hope your little one grows to appreciate how lucky she is.

My 2 children have both recieved between $5 and $10 a week 'pocket money' since birth (depending on age). This goes straight into their bank account. They also bank the occasional birthday gift etc. It is not a lot, so we don't notice it ourselves, but for little kids it really adds up. Once they have suffficient funds, we buy them a small parcel of shares. 5 year old has some NAB (bought when they were around $26) and they both fairly recently got some BHP shares each. We will keep adding to this over the years and though it won't be a huge amount, it will still be significant when they turn 18 or 21.
My five year old loves this - even just going to the bank to deposit she is learning to save not spend. She understands that she has shares and hopefully as she gets older will become more and more interested in thier return/dividends etc. This 'pocket money' is for investment only, not discretionary spending.

In addition my 5 year old has a rewards chart - certain behaviors we try to encourage on a daily basis. Just little things like cleaning up her toys and eating 2 peices of fruit. Each day she has all ticks on her chart she gets 50 cents to put in her money box. This money is for her to spend as she pleases. She is learning about handling money (gold coins are better than silver!), learning maths skills and many other benefits. Interestlying enough, she is reluctant to spend this money, preferring to see it in her money box.

We also save some of the $ I get from the governement for being a stay at home Mum - into a managed fund. This is for future educational needs.

Also, hubby and I would like to have our dream PPOR paid off before the kids start High School - that way if we go private we will have the funds to pay for it (rather than on paying a mortgage).

Good luck Sue. You are thinking about these things at the right time - when you son is a baby. I'm sure you will all benefit from this.

Lily

 

[Panic]

Gold

18oz of Gold at birth (that is what 10K used to buy

I'm in the camp of great education for my kids. I will not force them to study hard if they don’t want to though.
I plan on taking my kids around the globe when they are old enough on a sail boat. Maybe for several years. Should open up their eyes and give options/perspective for business.
In any case raise them properly and do not spoil them that is my goal. Teach them to fight for what they value and want, and help them out here and there if absolutely necessary.

Thx
V

 

[presto]

I have three sons 27, 25 & 21 all still at home, each of them have 2 property's, 2 of these properties are in the kellyville area and have values of around 600k each.
We brought both of these off the plan house and land packages.
We gave the boys 20% limited gaurantee from our own equity, this allowed them to use the future rental as an income and allowed them to borrow the 100% loan required.
The first one was purchased in 99 cost 290k rents at $ 400 per week today. The second was in 2000 cost $320k rents for $430.
We withdrew our equity gift 3 years ago when the debt became less than 80% and they have used the equity they have to purchase their second properties.
We repeated this equity loan with our youngest who purchased a property in Swansea on the Central Coast this was an of the plan purchase on his 18 birthday, again we used future income to help with his loan approval, this was on sold on completion, and he used the 50k profit from this to purchase a 3 bed unit in bathurst and a block of land.
Again my wife and i have all our equity back and have given then the start they needed and I try to mentor them and support them all the way.

 

[Lily House]

Hey Presto good one.
I like your thinking.
Lily

 

[presto]

thanks lily house, any parent can do this for their kids if they realy want to....I got a lot of enjoyment out of doing this, we talk about the opportunities available to us has a family.

 

[toony]

Two Kids

I have two kids. Daughter 6 and my son is 5 and started School last week.

I bought an investment property around the time my daughter was born. Its now worth over $150k more than i bought it for. So the kids education is taken care of, as long as i can keep the property.

At the same time I decided to put $100 a month into managed funds for each child. I lost interest in doing that and now these are worth only $3-5K.

So you can see the difference between property and shares/managed funds.

As for their financial education - i will encourage them to save. They have a money box now. I expect them to work part time from the age of 15 like i did. I dont think I will help them with a deposit on a house. They can save for it. I may only do it, if its like a business venture and we go halves in the property.

 

[Xenia]

I agree with the general comments that the best you could do for your children is to educate them to learn how to invest their money.

I believe you will be hindering their education and personal progress if you just hand things to them.

 

[sue78]

Thanks for your replies! there's so much for us to take away....I think I'd like to put $$/property aside for their Uni fund. Not really sure if we can afford all those years of private schooling. We are considering putting him in a public school for primary and private education for senior years.

I too, didn't think I'd be able to put money aside...no motivation after 6 mths. i like the idea of an ip.

I won't buy them a car (well maybe an old bomb for them to share ) or pay for their big trip but if they were interested in investing/property then I would definately lend them $ or equity to buy their first property.

I would love to have that sort of help from my family ...it would have made life just a little easier.

 

[Pablo]

I'm investing so that I can afford the private school fees for my kids. Once they finish school that stream of money is going to fund my and my wifes needs, not theirs. An education at a top private school is IMHO one of the best financial gifts I can give my kids.

mdk92,

I have the opposite opinion on this, a good education is all very well and good but what happens if your child does not have the intelligence or motivation to make full use of it, they may end up a cleaner with a very expensive education.

Instead my thinking is to buy my children an IP each now and educate them in investing and money matters so if they do end up being a cleaner at least they will be finacially set up and hopefully happy.

Also remeber that the cream always rises to the top. I never went to private schools or uni but I still earn more than all of my friends who did.

 

[Twitch]

Also remeber that the cream always rises to the top. I never went to private schools or uni but I still earn more than all of my friends who did.

The reality is that kids at a private schools score higher than those at public. I don't believe it's because they're smarter, but that the culture of private schools is different (it's not 'cool to be a fool' at a private school) and the teaching methods such that kids score higher. This extra can easily be the difference between a career in law/medicine or not.

Career isn't everything, but why not give them the best chance to score as high as they can? Also the whole experience of going to a private school with all the facilities and opportunities isn't bad either.

BTW, I'm a product of the public system and my experience there is why I feel passionately about this.