Building the family fortune
Discussion
A few posts in this thread https://www.pistonheads.com/gassing/topic.asp?h=0&... got me thinking. Some families work together to ensure that all generations end up more financially secure. This is particularly obvious in immigrant families of many ethnicities, although it occurs in the native population too. The benefits of the bank of mum & dad are obvious, but it extends to older family members starting pensions for the younger ones, and the younger ones playing a hands on role in looking after parents and grandparents when they need it.
The principle is fine, but it needs everyone to 'get with the programme', and precautions need to be taken from avaricious spouses and lazy or spendthrift family members who just see it as crock of gold fit for raiding.
Has anyone got experiences they would care to share?
The principle is fine, but it needs everyone to 'get with the programme', and precautions need to be taken from avaricious spouses and lazy or spendthrift family members who just see it as crock of gold fit for raiding.
Has anyone got experiences they would care to share?
Edited by GliderRider on Sunday 27th May 00:00
I don’t buy into the idea that you have to provide money for your children to have an easy life when they become adults. Try reading an excellent book “The Millionaire Next Door”. It proposes that the more you give your children, then the more they come to expect from you.
Far better to teach them a good work ethic and then they will enjoy the rewards from THEIR hard work.
Far better to teach them a good work ethic and then they will enjoy the rewards from THEIR hard work.
Not withstanding what Keith has just said, I do buy into families looking after each other. More so, neighbours and friends doing the same.
There is a reap what you sow element to life, or Karma, and this is important.
I suppose it depends on how far you want to take it, but looking after the people who looked after you, when you were a kid and needed them, seems a pretty obvious choice.
If this helps in sharing the wealth over many generations it cannot be harmful!
There is a reap what you sow element to life, or Karma, and this is important.
I suppose it depends on how far you want to take it, but looking after the people who looked after you, when you were a kid and needed them, seems a pretty obvious choice.
If this helps in sharing the wealth over many generations it cannot be harmful!
GliderRider said:
The principle is fine, but it needs everyone to 'get with the programme', and precautions need to be taken from avaricious spouses and lazy or spendthrift family members who just see it as crock of gold fit for raiding.
Has anyone got experiences they would care to share?
If you want to learn about the other end, google 'family offices'. Essentially these families get to a stage where the capacity for the family members themselves being incompetent is guarded against but having a 3rd party company managing the capital and investments.Has anyone got experiences they would care to share?
JulianPH said:
Not withstanding what Keith has just said, I do buy into families looking after each other. More so, neighbours and friends doing the same.
There is a reap what you sow element to life, or Karma, and this is important.
I suppose it depends on how far you want to take it, but looking after the people who looked after you, when you were a kid and needed them, seems a pretty obvious choice.
If this helps in sharing the wealth over many generations it cannot be harmful!
+1There is a reap what you sow element to life, or Karma, and this is important.
I suppose it depends on how far you want to take it, but looking after the people who looked after you, when you were a kid and needed them, seems a pretty obvious choice.
If this helps in sharing the wealth over many generations it cannot be harmful!
keith333 said:
I don’t buy into the idea that you have to provide money for your children to have an easy life when they become adults. Try reading an excellent book “The Millionaire Next Door”. It proposes that the more you give your children, then the more they come to expect from you.
Far better to teach them a good work ethic and then they will enjoy the rewards from THEIR hard work.
You have missed the point. You may not be able to afford to give your own kids the opportunities you wished you could have. So take your typical old people, bought a council home at reduced value which has increased in value, however at the time, the house was in the catchment of a rough school.Far better to teach them a good work ethic and then they will enjoy the rewards from THEIR hard work.
There are families where grandparents live a simple life, and their financial assistance enable the grandkids to go to Private school, and then there are families where the grandparents move to a villa in Portugal and ignore that their grandkids are at a crap school.
JulianPH said:
Not withstanding what Keith has just said, I do buy into families looking after each other. More so, neighbours and friends doing the same.
There is a reap what you sow element to life, or Karma, and this is important.
I suppose it depends on how far you want to take it, but looking after the people who looked after you, when you were a kid and needed them, seems a pretty obvious choice.
If this helps in sharing the wealth over many generations it cannot be harmful!
Absolutely agree with your sentiments Julian. I won’t be turfing my kids out the door at 18 with £2.50 in their pockets ;-)There is a reap what you sow element to life, or Karma, and this is important.
I suppose it depends on how far you want to take it, but looking after the people who looked after you, when you were a kid and needed them, seems a pretty obvious choice.
If this helps in sharing the wealth over many generations it cannot be harmful!
You can definitely help your children without simply giving them money.
This is a real tricky one. I think each to their one, each side of it has their positives and negatives however speaking as someone who had very very little when growing up, I do think very much of how much I want to give my children.
Its a fine balance between supporting their needs and supporting their wants.
As far as I can help it I won't be giving away anything and as silly as it sounds, things like buying certain trainers or clothing or cars then well you better go get a job and earn that.
I have grew up with plenty who were giving these things and they are as useless as they get, complain about everything and don't have the basic instinct to graft for what they want.
In saying that when my children do need me to support them with key things in education or if they have a sound business idea and they need a loan to take it off the ground or a #help with small deposit for a house then I would like to think I will be able to do that when the time arises.
Its a fine balance between supporting their needs and supporting their wants.
As far as I can help it I won't be giving away anything and as silly as it sounds, things like buying certain trainers or clothing or cars then well you better go get a job and earn that.
I have grew up with plenty who were giving these things and they are as useless as they get, complain about everything and don't have the basic instinct to graft for what they want.
In saying that when my children do need me to support them with key things in education or if they have a sound business idea and they need a loan to take it off the ground or a #help with small deposit for a house then I would like to think I will be able to do that when the time arises.
XMT, its a good point you make about the difference between 'wants' and 'needs'. There are also the things that offspring need but don't appreciate until its too late, e.g. pensions, at least too late to do it cheaply, as its the early years which do best with the compound growth.
There is a difference between handing things to descendents on a plate, and helping them avoid the financial traps we either could not, or were not financially astute enough, to avoid. Generally, expensive gifts to children at best leave them with no appreciation for the effort required to earn the money, and at worst, have fatal consequences. For example, Kevin, the son of Sir Freddie Laker of Skytrain fame, who was killed at 17 in the sports car his father gave him.
In my own case, if I wanted, say a bicycle, my parents would agree to part of the cost as a birthday or Chrismas present, once I had proven I could earn the rest by doing odd jobs.
What I was really getting at when starting this thread is that if add up all that money we lose to banks, insurance companies etc. through our lives, how much better off our families would be if that money was kept 'in-house'. E.g. if one were to get a mortgage, a significant part of the cost is the insurance aspect covering the upper few percent of the loan. By borrowing the money within one's family, any interest paid on this can be below commercial rates, and the money is not lost. The lender may also get a better rate than if they just leave the money in a savings account.
There is a difference between handing things to descendents on a plate, and helping them avoid the financial traps we either could not, or were not financially astute enough, to avoid. Generally, expensive gifts to children at best leave them with no appreciation for the effort required to earn the money, and at worst, have fatal consequences. For example, Kevin, the son of Sir Freddie Laker of Skytrain fame, who was killed at 17 in the sports car his father gave him.
In my own case, if I wanted, say a bicycle, my parents would agree to part of the cost as a birthday or Chrismas present, once I had proven I could earn the rest by doing odd jobs.
What I was really getting at when starting this thread is that if add up all that money we lose to banks, insurance companies etc. through our lives, how much better off our families would be if that money was kept 'in-house'. E.g. if one were to get a mortgage, a significant part of the cost is the insurance aspect covering the upper few percent of the loan. By borrowing the money within one's family, any interest paid on this can be below commercial rates, and the money is not lost. The lender may also get a better rate than if they just leave the money in a savings account.
GliderRider said:
What I was really getting at when starting this thread is that if add up all that money we lose to banks, insurance companies etc. through our lives, how much better off our families would be if that money was kept 'in-house'. E.g. if one were to get a mortgage, a significant part of the cost is the insurance aspect covering the upper few percent of the loan. By borrowing the money within one's family, any interest paid on this can be below commercial rates, and the money is not lost. The lender may also get a better rate than if they just leave the money in a savings account.
This really does depend on the circumstances, when I last re-mortgaged I could have borrowed the money from Mum (about 40k). However, I could get five years fixed at 2.04%, no fees. I would have had to pay her 2% to be worth her while, so with the very slight risks of me somehow defaulting and possible family fallout that could result it wasn't worth it. In reality if I suddenly couldn't pay the mortgage she may well have helped out but there is a difference for me between an offer to help and not being able to pay her back.
Having said that, I would like to self build one day and being able to suddenly borrow a lump sum (to buy the land) with an informal timescale to repay could be very useful rather than using a bank.
Edited by mfmman on Thursday 31st May 12:29
I like the concept of building family wealth, and my parents helped us out when we bought our first house, and I suspect we will do the same for our kids.
We have an elderly relative who is now in care, and she never helped anyone out financially, but accrued quite a cushion for herself which is now being taken by the state. Seems pretty pointless to me to collect assets for them to disappear that way.
We have an elderly relative who is now in care, and she never helped anyone out financially, but accrued quite a cushion for herself which is now being taken by the state. Seems pretty pointless to me to collect assets for them to disappear that way.
Tahiti said:
We have an elderly relative who is now in care, and she never helped anyone out financially, but accrued quite a cushion for herself which is now being taken by the state. Seems pretty pointless to me to collect assets for them to disappear that way.
Isn't that a good thing? To save during your lifetime so that you can be cared for in your dotage?If she wasn't paying for her care, who will do?
boyse7en said:
Tahiti said:
We have an elderly relative who is now in care, and she never helped anyone out financially, but accrued quite a cushion for herself which is now being taken by the state. Seems pretty pointless to me to collect assets for them to disappear that way.
Isn't that a good thing? To save during your lifetime so that you can be cared for in your dotage?If she wasn't paying for her care, who will do?
Sadly (or not, depending upon whose interests you have in mind), many people only inherit money when they are too old to really enjoy it. I do agree with boyse7en that the woman concerned may have been in a position to directly benefit others but chose not to.
hyphen said:
You have missed the point. You may not be able to afford to give your own kids the opportunities you wished you could have. So take your typical old people, bought a council home at reduced value which has increased in value, however at the time, the house was in the catchment of a rough school.
There are families where grandparents live a simple life, and their financial assistance enable the grandkids to go to Private school, and then there are families where the grandparents move to a villa in Portugal and ignore that their grandkids are at a crap school.
But perhaps the second set know that their grandchildren are intelligent enough that they have no need of private school.There are families where grandparents live a simple life, and their financial assistance enable the grandkids to go to Private school, and then there are families where the grandparents move to a villa in Portugal and ignore that their grandkids are at a crap school.
I do understand people with thick children doing their best for them, I really do, but it has to be remembered that having a private school on the CV does no-one any favours nowadays.
James_B said:
But perhaps the second set know that their grandchildren are intelligent enough that they have no need of private school.
I do understand people with thick children doing their best for them, I really do, but it has to be remembered that having a private school on the CV does no-one any favours nowadays.
Thick people don't (generally) get in to public schools...I do understand people with thick children doing their best for them, I really do, but it has to be remembered that having a private school on the CV does no-one any favours nowadays.
And the point of going to public school has nothing to do with intelligence levels, anyway - if you think that then you've missed the point.
And where do you get the part about it not looking good on a CV from?! Are you going to tell me that having Oxbridge on your CV would be to your detriment, as well? Sounds like utter nonsense to me.
Do you want to give nearly half of everything you own to the government?
It is massively effective to start a pension for kids at a young age and they are completely unable to spend it.
Example:
- If not, give some of it away early.
- If so, blame the parents....
It is massively effective to start a pension for kids at a young age and they are completely unable to spend it.
Example:
- You can give away £3,000 a year completely outside the IHT net (Not even a PET needing 7 years to fall away)
- £2,880 can be paid into pension - and grossed up by the government to £3,600
- That £3,600 can grow completely tax free for, say, 50 years
- Value of £3,600 compounded for 50 years at, say, 7% p.a. = £106,000
- Do it for 10 years and Junior gets around £1million pension pot!!
Ginge R said:
If somebody can tell me what pension legislation will look like in five years, let alone five decades..
Clearly you have failed to grasp the basics,- IHT exemption £3,000 exists NOW.
- Pension contributions get grossed up from £2,880 to £3,600 NOW.
- No-one has ever been able to predict the future yet, strangely, there are pensioners enjoying their pensions today...
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