Hi all, I have 2 children in early years of high school. So they have about 8-10 years before they start work. I am considering helping them in their financial journey and through proper planning from now. I am wondering what is a good way to either contribute one off or on a regular basis such that there no or less tax implication to myself (could I contribute pretax?) or them. As I am a property investor I am thinking how about creating a trust separately for each or jointly for them and act as the caretaker/ trustee, and buy property in the trust. What other financial instruments would you recommend? Could you share some thoughts on approaches to achieve good financial future for them? Are there good financial planners out there you would recommend?
Insurance bonds - after 10 years they're tax free, super but access is pre-60 yrs. You can add to them annually as well.
Just choose an investment that you think you'll make the most money on and pay tax. 8 years - a long time to be focusing on tax minimisation over growth.
Is your PPOR paid off? If not, deposit the money into an offset and keep a tally of contributions on their behalf, adding the interest you have saved. Marg
Hi Marg, I am currently rentvesting while living in unaffordable Sydney. Yes I put things into an offset for now but would like to consider higher capital growth instruments like property.
Be careful that you do not give them too much. The gift can do the opposite. If your family values helping a new generation get a leg up consider a strategy where you will match their investment dollar for dollar. So if they get half a deposit you will do the other half. The problem with trying to give them an asset, at a young age, is that they might not want the asset and they did not work to get it. Alternatively your kids might value something else - like a Harvard MBA so your gift as a leg up could go towards that. I would not try and create new entities for a concept in 10 years time.
I think generally not good to set up a bare trust for kids. Hold the money yourself and use it to save interest of your loans.
I have two two low end outer western Sydney properties that I'm holding onto for the kids. I intend to guarantor the kids their house deposits - it limits the risk against each house and I don't physically give them any money. They can then make the choice to commence an investment journey or not. I think giving kids too much means they can advantage and never do anything for themselves.
Why wait so long? Put a CV together for them and let them start finding a part time job NOW. Best gift you can give them is a work ethic.
Totally agree, I was at work at 14, Working 3 jobs at 18, Then back to one post-graduation (20yrs) Loved it - taught me so much.
Our kids are now in their early 30's. We have NEVER given them any cash. They had to earn their own. But we did give them a good education (private schools and university), high moral values, good work ethic, lots of inspiration/encouragement/motivation, access to our knowledge and expertise, always-on-call great mentors, ... Both have great jobs, great partners, ... and both already purchased two properties each, total value approaching $3M. Both are now saving up for their third properties. We believe what we given them is a lot more valuable than a bundle of cash. Besides, they will get our cash (+ all our other assets) when we move on .
