1 00:00:00,240 --> 00:00:03,480 Speaker 1: Start here, helping adult children into the property market without 2 00:00:03,560 --> 00:00:19,120 Speaker 1: ever sacrificing your own financial independence. Hello, and welcome back 3 00:00:19,160 --> 00:00:22,040 Speaker 1: to start here. This is the very special mini series 4 00:00:22,040 --> 00:00:25,920 Speaker 1: within Sugar Mama's Fireplay, where I answer your real questions 5 00:00:25,960 --> 00:00:30,920 Speaker 1: about money, about investing property, and of course financial independence, 6 00:00:31,280 --> 00:00:34,519 Speaker 1: without the hype, without fear mongering, and always with a 7 00:00:34,680 --> 00:00:38,519 Speaker 1: long term lens. Now, today's question is one that I 8 00:00:38,560 --> 00:00:42,560 Speaker 1: know will resonate deeply with so many parents right now, 9 00:00:43,000 --> 00:00:48,040 Speaker 1: because I see this conversation playing out everywhere at dinner tables, 10 00:00:48,320 --> 00:00:52,360 Speaker 1: even the dog park, in meetings, and quietly in people's 11 00:00:52,520 --> 00:00:56,840 Speaker 1: own minds, including my own. And it's about how, or 12 00:00:57,080 --> 00:01:00,480 Speaker 1: rather weather to help adult children get into the property 13 00:01:00,520 --> 00:01:05,800 Speaker 1: market without compromising your own financial security, wellbeing or long 14 00:01:05,920 --> 00:01:11,160 Speaker 1: term financial goals. The email they were received was incredibly thoughtful. 15 00:01:11,680 --> 00:01:15,240 Speaker 1: These two parents are in their early fifties, earning a 16 00:01:15,360 --> 00:01:19,280 Speaker 1: really strong income, and they're paying extra off their mortgage, 17 00:01:19,400 --> 00:01:23,840 Speaker 1: maximizing their super through salary sacrificing and extra contributions, and 18 00:01:24,040 --> 00:01:26,880 Speaker 1: they have built up a share portfolio which they're continuously 19 00:01:27,400 --> 00:01:32,160 Speaker 1: investing towards. And most importantly, they've actually done the groundwork 20 00:01:32,240 --> 00:01:37,440 Speaker 1: around defining what exactly is enough for their financial freedom. 21 00:01:37,480 --> 00:01:40,240 Speaker 1: You know, they've clarified their mindful money number, which I 22 00:01:40,280 --> 00:01:43,240 Speaker 1: explain in my book Mindful Money. You know, they know 23 00:01:43,440 --> 00:01:47,680 Speaker 1: exactly what they value, which includes experiences, travel, and choice 24 00:01:47,760 --> 00:01:51,120 Speaker 1: in retirement. So they really have done the work and 25 00:01:51,160 --> 00:01:55,800 Speaker 1: they're proudly on track. Now. They also have two adult 26 00:01:55,880 --> 00:02:00,680 Speaker 1: children in their early to mid twenties who are both 27 00:02:00,840 --> 00:02:04,320 Speaker 1: discipline savers, and they're still living at home and they're 28 00:02:04,320 --> 00:02:08,280 Speaker 1: doing everything right, and yet they're still facing a property 29 00:02:08,360 --> 00:02:12,880 Speaker 1: market that feels almost impossible. And I agree with that. 30 00:02:13,400 --> 00:02:16,799 Speaker 1: So the big question here that they're asking is how 31 00:02:16,840 --> 00:02:21,680 Speaker 1: can we help our adult kids without hurting ourselves? And 32 00:02:21,880 --> 00:02:26,080 Speaker 1: that is exactly the right question to be asking right now. 33 00:02:26,160 --> 00:02:30,799 Speaker 1: So let's just start right here. So the first thing 34 00:02:30,840 --> 00:02:34,440 Speaker 1: I want to say is this, this is not a 35 00:02:34,560 --> 00:02:41,000 Speaker 1: question about generosity versus selfishness. It's actually about sustainability boundaries, 36 00:02:41,040 --> 00:02:44,800 Speaker 1: I think, and long term thinking. You know, parents don't 37 00:02:44,840 --> 00:02:48,320 Speaker 1: stop needing money at age sixty. In fact, I think 38 00:02:48,320 --> 00:02:50,440 Speaker 1: it is actually quite the opposite, because for many people, 39 00:02:50,840 --> 00:02:54,480 Speaker 1: the most expensive years of our life are actually after 40 00:02:54,639 --> 00:02:57,000 Speaker 1: you know, when work ends, you know, when our health 41 00:02:57,040 --> 00:03:01,520 Speaker 1: costs rise. We have greater lifestyle goal like international travel, 42 00:03:02,080 --> 00:03:06,000 Speaker 1: flexibility matters so much more. But you're also timing this 43 00:03:06,080 --> 00:03:09,280 Speaker 1: with the ability to actually earn an income dropping away 44 00:03:09,360 --> 00:03:14,440 Speaker 1: with retirement. So helping your children, particularly adult children, should 45 00:03:14,639 --> 00:03:19,440 Speaker 1: never come at the cost of your own financial independence. However, 46 00:03:19,919 --> 00:03:22,799 Speaker 1: I'm proud to say and to share you can still 47 00:03:22,840 --> 00:03:27,800 Speaker 1: be supportive without being financially exposed. And yes, you can 48 00:03:27,840 --> 00:03:32,880 Speaker 1: still be generous without creating future pressure, resentment or regret 49 00:03:33,080 --> 00:03:37,840 Speaker 1: or even worse like entitlement. So before we talk about 50 00:03:37,920 --> 00:03:42,520 Speaker 1: like guarent toores, joint purchases, like investment strategies, we need 51 00:03:42,560 --> 00:03:45,839 Speaker 1: to start with the most important question of all, which 52 00:03:45,880 --> 00:03:48,640 Speaker 1: I think a lot of people sort of overlook, and 53 00:03:48,680 --> 00:03:53,840 Speaker 1: that is what do our kids actually want? Not like 54 00:03:53,920 --> 00:03:56,400 Speaker 1: what is the property market doing, not what are their 55 00:03:56,440 --> 00:03:59,520 Speaker 1: friends doing and buying, and not what are their friends' 56 00:03:59,520 --> 00:04:03,400 Speaker 1: parents doing and buying, and not what their parents feel 57 00:04:03,400 --> 00:04:06,960 Speaker 1: that they should be helping their children with. But instead, 58 00:04:07,080 --> 00:04:12,000 Speaker 1: do the kids genuinely want to own property right now? 59 00:04:12,040 --> 00:04:15,760 Speaker 1: Do they want that responsibility? And if they do, where 60 00:04:15,800 --> 00:04:18,279 Speaker 1: do they want to live and are they happy to 61 00:04:18,279 --> 00:04:20,320 Speaker 1: look at maybe an investment property or a property to 62 00:04:20,360 --> 00:04:24,920 Speaker 1: actually live in? Also, what lifestyle are they actually prioritizing 63 00:04:25,000 --> 00:04:28,960 Speaker 1: right now, and are they emotionally and financially ready for 64 00:04:29,000 --> 00:04:33,479 Speaker 1: something like a mortgage, like a long term debt. I 65 00:04:33,520 --> 00:04:38,640 Speaker 1: see so many families jump straight to the solutions before 66 00:04:38,760 --> 00:04:43,400 Speaker 1: they've actually had the values conversation. You know, property should 67 00:04:43,440 --> 00:04:47,280 Speaker 1: never be a parent led project. The motivation has to 68 00:04:47,320 --> 00:04:51,800 Speaker 1: come from the child. If the driving force is fear, 69 00:04:52,000 --> 00:04:55,400 Speaker 1: like fear of missing out, or fear of being left behind, 70 00:04:56,000 --> 00:05:00,159 Speaker 1: or the fear of struggling financially, that often leads to 71 00:05:00,360 --> 00:05:04,680 Speaker 1: irrational decisions and they don't tend to age very well 72 00:05:04,720 --> 00:05:08,200 Speaker 1: and come with a lot of regret and remorse. So 73 00:05:08,760 --> 00:05:13,760 Speaker 1: the second checkpoint is the discipline. Here. Parental help should 74 00:05:13,920 --> 00:05:19,120 Speaker 1: reward good financial habits, not replace them. Because here's the 75 00:05:19,200 --> 00:05:22,320 Speaker 1: hard truth, and I've seen this so many times. If 76 00:05:22,360 --> 00:05:27,120 Speaker 1: you give a financially undisciplined child, say a home deposit, 77 00:05:27,680 --> 00:05:31,000 Speaker 1: you actually haven't helped them. You've just increased the size 78 00:05:31,040 --> 00:05:34,400 Speaker 1: of their mistakes. And you've also robbed them of that 79 00:05:34,480 --> 00:05:38,000 Speaker 1: feeling of pride and self worth because they haven't actually 80 00:05:38,080 --> 00:05:42,440 Speaker 1: done the work themselves. Before any support is considered. As 81 00:05:42,480 --> 00:05:45,680 Speaker 1: a parent myself and as a financial planner, I would 82 00:05:45,720 --> 00:05:49,360 Speaker 1: want to see a consistent saving history. I'd also want 83 00:05:49,400 --> 00:05:52,200 Speaker 1: to see that they were capable of living within their 84 00:05:52,279 --> 00:05:56,279 Speaker 1: means and they were walking the talk, and also seeing 85 00:05:56,320 --> 00:06:00,320 Speaker 1: an understanding of the responsibility of a mortgage, how the 86 00:06:00,360 --> 00:06:04,520 Speaker 1: repayments work, what happens if interest rates change and go up, 87 00:06:04,760 --> 00:06:08,040 Speaker 1: and also all of those ongoing costs that are attached 88 00:06:08,120 --> 00:06:11,000 Speaker 1: to owning a property. And then finally, I want to 89 00:06:11,040 --> 00:06:13,880 Speaker 1: see that they have a budget that they can stick 90 00:06:13,960 --> 00:06:16,600 Speaker 1: to and that that budget will actually work for them 91 00:06:16,839 --> 00:06:19,599 Speaker 1: after they've bought the property, not just before they've bought 92 00:06:19,600 --> 00:06:21,440 Speaker 1: the property. At the end of the day, for a 93 00:06:21,560 --> 00:06:26,600 Speaker 1: child cannot manage cash flow now property that is owning 94 00:06:26,680 --> 00:06:31,120 Speaker 1: a property is definitely not going to fix it all right, So, 95 00:06:31,160 --> 00:06:34,440 Speaker 1: now that I've served up my tough love, I'm now 96 00:06:34,480 --> 00:06:37,080 Speaker 1: going to move on to talking about the risk that 97 00:06:37,120 --> 00:06:40,120 Speaker 1: no one likes to talk about enough, but I'm going 98 00:06:40,160 --> 00:06:45,039 Speaker 1: to hear why not, and that is longevity risk. If 99 00:06:45,080 --> 00:06:49,600 Speaker 1: you're in your early fifties, you could easily have thirty 100 00:06:49,640 --> 00:06:53,440 Speaker 1: five to forty years ahead of you of living. Its 101 00:06:53,480 --> 00:06:58,599 Speaker 1: costs that includes inflation, mircro volatility changes and interest rates, 102 00:06:58,880 --> 00:07:02,360 Speaker 1: health and age care costs which are only getting more 103 00:07:02,360 --> 00:07:07,000 Speaker 1: and more expensive and potentially reduced earning capacity. So before 104 00:07:07,240 --> 00:07:11,520 Speaker 1: helping our children, you need to ask yourselves this first, 105 00:07:12,480 --> 00:07:16,240 Speaker 1: is our superannuation on track for the life that we want? 106 00:07:16,680 --> 00:07:18,840 Speaker 1: Have we got enough? Does it produce the income that 107 00:07:18,880 --> 00:07:21,800 Speaker 1: we need? And is that income going to last all 108 00:07:21,840 --> 00:07:24,760 Speaker 1: the way through into our nineties or even over to 109 00:07:24,800 --> 00:07:29,000 Speaker 1: one hundred life and beyond. Have we actually stress tested 110 00:07:29,160 --> 00:07:32,560 Speaker 1: our financial strategy and game plan for things like market 111 00:07:32,600 --> 00:07:37,320 Speaker 1: conditions you know, corrections, pullbacks, or even the need to 112 00:07:37,360 --> 00:07:41,120 Speaker 1: potentially have an early retirement. And are we actually on 113 00:07:41,240 --> 00:07:45,080 Speaker 1: track with our goals in particularly our superannuation. If we 114 00:07:45,120 --> 00:07:47,440 Speaker 1: do go and help one child or both children, does 115 00:07:47,480 --> 00:07:49,280 Speaker 1: that mean we're taking a step back or can we 116 00:07:49,320 --> 00:07:53,120 Speaker 1: actually safely afford this? I would never as a financial 117 00:07:53,120 --> 00:07:56,240 Speaker 1: plan I want to see parents sacrifice their own financial 118 00:07:56,240 --> 00:08:01,080 Speaker 1: independence to fund their children's because financial pressure later in 119 00:08:01,160 --> 00:08:04,440 Speaker 1: life doesn't just affect you, it actually will end up 120 00:08:04,520 --> 00:08:08,600 Speaker 1: impacting and affecting your kids too. And that's something personally 121 00:08:08,680 --> 00:08:11,440 Speaker 1: I would never want to put on my own children. 122 00:08:11,720 --> 00:08:14,119 Speaker 1: For me as a parent, yes, I want my children 123 00:08:14,160 --> 00:08:16,280 Speaker 1: to be financially independent, but I want them to want 124 00:08:16,280 --> 00:08:19,360 Speaker 1: to be financially independent because they have witnessed me do 125 00:08:19,480 --> 00:08:23,080 Speaker 1: the work and build that financial independence for myself first, 126 00:08:23,200 --> 00:08:26,600 Speaker 1: and that inspires them, empowers them, and of course educates them. 127 00:08:26,720 --> 00:08:29,600 Speaker 1: Now let's walk through some of the common options that 128 00:08:29,640 --> 00:08:33,079 Speaker 1: often people sort of start thinking about and start talking. 129 00:08:33,520 --> 00:08:36,160 Speaker 1: So first is the obvious one, which is acting as 130 00:08:36,240 --> 00:08:40,160 Speaker 1: a garrantel. Now, yes, this can really help children avoid 131 00:08:40,440 --> 00:08:43,720 Speaker 1: LMI and enter the property market sooner, but this is 132 00:08:43,800 --> 00:08:49,520 Speaker 1: definitely not a soft favor. It's a really hard legal commitment. Obviously. 133 00:08:49,559 --> 00:08:53,400 Speaker 1: The risks include that you are legally responsible if repayments 134 00:08:53,520 --> 00:08:57,800 Speaker 1: aren't met, and it can also reduce your own borrowing capacity. 135 00:08:58,280 --> 00:09:02,160 Speaker 1: It can strain family relationships, things go wrong, and the 136 00:09:02,200 --> 00:09:03,840 Speaker 1: banks at the end of the day, they don't care 137 00:09:03,960 --> 00:09:05,840 Speaker 1: that it is your family, it is your daughter, it 138 00:09:05,880 --> 00:09:09,040 Speaker 1: is your son. If this is considered at all and 139 00:09:09,120 --> 00:09:11,840 Speaker 1: you want to go guarantee, you have to consider a 140 00:09:11,920 --> 00:09:16,080 Speaker 1: cap guarantee and a clear exit strategy. You both have 141 00:09:16,160 --> 00:09:19,320 Speaker 1: to get independent legal advice, and there needs to be 142 00:09:19,440 --> 00:09:23,640 Speaker 1: a plan in place to remove the guarantee as soon 143 00:09:23,679 --> 00:09:25,880 Speaker 1: as you possibly can, which is normally when there's enough 144 00:09:25,920 --> 00:09:29,920 Speaker 1: equity and there's great strong serviceability. This is not something 145 00:09:29,960 --> 00:09:32,960 Speaker 1: you would go and do casually like big alarm bells 146 00:09:32,960 --> 00:09:36,320 Speaker 1: going off around this. Another option is obviously buying a 147 00:09:36,360 --> 00:09:39,160 Speaker 1: property together, whether it be an investment property or whether 148 00:09:39,200 --> 00:09:41,360 Speaker 1: it be you know, buying a home to get like 149 00:09:41,400 --> 00:09:44,080 Speaker 1: a property together where your children live in it. Now, 150 00:09:44,120 --> 00:09:46,560 Speaker 1: on paper, this can look attractive, and I've seen it 151 00:09:46,559 --> 00:09:48,880 Speaker 1: play out well because obviously you've got the shared costs 152 00:09:49,280 --> 00:09:51,760 Speaker 1: makes it so much easier to service the big mortgage. 153 00:09:52,120 --> 00:09:54,520 Speaker 1: And potentially, you know, if you're combining forces, you can 154 00:09:54,640 --> 00:09:56,960 Speaker 1: get access to a better property or a property in 155 00:09:56,960 --> 00:10:01,439 Speaker 1: a more desirable area. But joint ownership comes with complexity. 156 00:10:01,640 --> 00:10:04,079 Speaker 1: You know, you don't have as much control. There are 157 00:10:04,080 --> 00:10:08,080 Speaker 1: capital gains implications, you know piicular capital gains tax. What 158 00:10:08,280 --> 00:10:11,360 Speaker 1: happens when life changes? You know what happens if the 159 00:10:11,440 --> 00:10:14,120 Speaker 1: child partners up and they partner moves in. What happens there? 160 00:10:14,160 --> 00:10:16,760 Speaker 1: What happens if someone wants out, like your children want 161 00:10:16,800 --> 00:10:18,600 Speaker 1: to sell the property and buy something else on their 162 00:10:18,640 --> 00:10:20,880 Speaker 1: own in their own independent way, Like, how's that going 163 00:10:20,920 --> 00:10:22,360 Speaker 1: to work? You're going to be up for capital gains 164 00:10:22,360 --> 00:10:24,439 Speaker 1: tax on your share because you didn't live in the property. 165 00:10:24,679 --> 00:10:28,199 Speaker 1: Is joint ownership can work beautifully until it doesn't, And 166 00:10:28,240 --> 00:10:30,480 Speaker 1: that's when things can get really nasty and break and 167 00:10:30,559 --> 00:10:34,640 Speaker 1: tear apart families and life always changes. So if families 168 00:10:34,679 --> 00:10:36,959 Speaker 1: do decide to go down this path again, like having 169 00:10:37,120 --> 00:10:40,600 Speaker 1: formal detail agreements in place, that agreed upfront before you 170 00:10:40,640 --> 00:10:44,000 Speaker 1: sign the dotted line and get legal advice, that is essential, 171 00:10:44,160 --> 00:10:47,640 Speaker 1: not optional. Now, another option I mentioned was some parents 172 00:10:47,800 --> 00:10:50,840 Speaker 1: like to consider buying an investment property with their child 173 00:10:50,880 --> 00:10:53,360 Speaker 1: while the child rents where they want to live or 174 00:10:53,360 --> 00:10:56,480 Speaker 1: maybe perhaps you know, keeps living at home. Now, this 175 00:10:56,679 --> 00:11:00,520 Speaker 1: can actually offer amazing flexibility and lifestyle choice, but you know, 176 00:11:00,600 --> 00:11:03,959 Speaker 1: you still carry that landlord risk, and you are still 177 00:11:04,000 --> 00:11:08,160 Speaker 1: financially entangled. It may actually not feel like financial independence 178 00:11:08,160 --> 00:11:11,280 Speaker 1: for the child. You know, owning a property doesn't automatically 179 00:11:11,320 --> 00:11:14,560 Speaker 1: equal freedom. Cash flow and choice does. All right, Now, 180 00:11:14,640 --> 00:11:17,680 Speaker 1: let's talk about the deposit, the savings, the cash flow. 181 00:11:18,400 --> 00:11:20,880 Speaker 1: One of my preferred options if you are going to 182 00:11:20,920 --> 00:11:23,520 Speaker 1: look at buying a property with your child, whether it 183 00:11:23,520 --> 00:11:25,240 Speaker 1: be for them to live in or for you both 184 00:11:25,280 --> 00:11:27,199 Speaker 1: to you know, rent it out and both be landlords. 185 00:11:27,840 --> 00:11:30,520 Speaker 1: So my preferred option when it comes to saving up 186 00:11:30,559 --> 00:11:36,280 Speaker 1: the deposit and helping your children is matching contributions. For example, 187 00:11:36,440 --> 00:11:39,600 Speaker 1: your child says fifty thousand dollars, you would then go 188 00:11:39,640 --> 00:11:41,400 Speaker 1: and match it with the equal amount, or you can 189 00:11:41,440 --> 00:11:45,000 Speaker 1: perhaps have an agreed split, maybe it's seventy thirty, you know, 190 00:11:45,120 --> 00:11:48,559 Speaker 1: twenty eighty, whatever is financially comfortable for you both. Now, 191 00:11:49,080 --> 00:11:52,960 Speaker 1: the thing I like about matching, regardless of what percentage 192 00:11:52,960 --> 00:11:56,439 Speaker 1: it might be, is it does actually encourage self discipline, 193 00:11:56,480 --> 00:12:01,560 Speaker 1: financial discipline. It also caps the parental exposure, like especially 194 00:12:01,600 --> 00:12:04,200 Speaker 1: you know, if you're matching, you know equally, you know 195 00:12:04,280 --> 00:12:06,600 Speaker 1: your exposure is limited to whatever the child has had 196 00:12:06,640 --> 00:12:08,960 Speaker 1: to save up. And it also preserves a sense of 197 00:12:09,040 --> 00:12:12,640 Speaker 1: fairness between siblings and keeps the child at all times 198 00:12:12,679 --> 00:12:15,280 Speaker 1: in the driver's seat. So it's very empowering and it's 199 00:12:15,280 --> 00:12:19,920 Speaker 1: definitely an approach that supports without necessarily rescuing the child. 200 00:12:19,960 --> 00:12:23,160 Speaker 1: So this can be a great way to empower, educate, 201 00:12:23,200 --> 00:12:25,720 Speaker 1: and inspire your children to start saving up a deposit, 202 00:12:26,160 --> 00:12:29,760 Speaker 1: understanding the importance of having a goal, exercising self disciplines, 203 00:12:29,840 --> 00:12:32,160 Speaker 1: saying no, having a budget, learning to stick to it, 204 00:12:32,400 --> 00:12:34,440 Speaker 1: and starting to do their own research as to what 205 00:12:34,600 --> 00:12:37,600 Speaker 1: actually really is involved in having and owning a property, 206 00:12:37,640 --> 00:12:40,240 Speaker 1: whether it's to live in or to actually rent out, 207 00:12:40,320 --> 00:12:42,360 Speaker 1: So this is a great way to get them in 208 00:12:42,400 --> 00:12:45,360 Speaker 1: the driving seat of a deposit. Now I want to 209 00:12:45,400 --> 00:12:47,400 Speaker 1: move on from this and talk about a strategy that 210 00:12:47,559 --> 00:12:51,000 Speaker 1: I personally love as a parent and one that I 211 00:12:51,040 --> 00:12:53,160 Speaker 1: intend in doing for my children when they get to 212 00:12:53,200 --> 00:12:54,840 Speaker 1: the age of wanting to get in the property market. 213 00:12:54,920 --> 00:12:57,800 Speaker 1: And this is actually a strategy that I don't think 214 00:12:58,160 --> 00:13:01,840 Speaker 1: gets enough attentions. So let me share with you. Instead 215 00:13:01,840 --> 00:13:05,319 Speaker 1: of putting every dollar into a property deposit for your children, 216 00:13:05,520 --> 00:13:09,600 Speaker 1: parents can actually help their children build a share portfolio. First. 217 00:13:09,920 --> 00:13:11,640 Speaker 1: Now you might be wondering why would you want to 218 00:13:11,679 --> 00:13:13,920 Speaker 1: do that. This is all about property and how hard 219 00:13:13,920 --> 00:13:16,480 Speaker 1: the property market is. Well, let me just borrow your 220 00:13:16,480 --> 00:13:20,160 Speaker 1: brain for a second. A share portfolio can offer liquidity, 221 00:13:20,360 --> 00:13:24,360 Speaker 1: it can offer flexibility, it can offer income passive income, 222 00:13:24,480 --> 00:13:29,160 Speaker 1: passive income from dividends, and it also helps create optionality. 223 00:13:29,400 --> 00:13:33,680 Speaker 1: Property we'll all know is incredibly expensive, it's illiquid, and 224 00:13:33,840 --> 00:13:37,199 Speaker 1: it's cash flow hungry. Think about the strata, the insurance, 225 00:13:37,280 --> 00:13:41,520 Speaker 1: the council rates. These expenses really do eat into your 226 00:13:41,559 --> 00:13:45,160 Speaker 1: budget and your cashrow and they don't really leave much leftover. Now, 227 00:13:45,280 --> 00:13:48,640 Speaker 1: shares pay you, You get dividends, and sometimes you even 228 00:13:48,640 --> 00:13:50,800 Speaker 1: get frank dividends, which can help you save money on 229 00:13:50,840 --> 00:13:53,520 Speaker 1: tax depending on your marginal tax rate. And rather than 230 00:13:53,679 --> 00:13:57,439 Speaker 1: racing to buy an asset that costs money every single month, 231 00:13:57,760 --> 00:14:01,040 Speaker 1: this approach actually helps children build an set that generates 232 00:14:01,160 --> 00:14:04,080 Speaker 1: a passive income before they go and take on the 233 00:14:04,120 --> 00:14:08,000 Speaker 1: massive responsibility and stress and pressure of a mortgage. Now 234 00:14:08,040 --> 00:14:10,800 Speaker 1: there are two powerful ways that this can work, so 235 00:14:11,000 --> 00:14:14,800 Speaker 1: let me explain. Option A is where the shares help 236 00:14:15,040 --> 00:14:19,840 Speaker 1: service the mortgage repayments. They have a shared portfolio paying dividends, 237 00:14:20,040 --> 00:14:23,400 Speaker 1: and once that property is purchased, those dividends can help 238 00:14:23,440 --> 00:14:26,160 Speaker 1: with the mortgage repayments. In fact, they might even help 239 00:14:26,160 --> 00:14:29,040 Speaker 1: pay off the mortgage. And of course, whether it's helping 240 00:14:29,080 --> 00:14:31,600 Speaker 1: service the repayments or helping pay it off, the principle 241 00:14:31,640 --> 00:14:35,000 Speaker 1: that is it helps reduce the financial pressure, particularly with 242 00:14:35,120 --> 00:14:37,840 Speaker 1: things you know, like rate rises, or perhaps they're going 243 00:14:37,880 --> 00:14:40,000 Speaker 1: to have a family and they're going down to one income. 244 00:14:40,080 --> 00:14:42,760 Speaker 1: This is where that passive income can be invaluable. And 245 00:14:42,800 --> 00:14:45,400 Speaker 1: of course it creates a bit of a psychological buffer. 246 00:14:45,720 --> 00:14:49,440 Speaker 1: Like imagine starting a mortgage with two incomes. You have 247 00:14:49,560 --> 00:14:53,080 Speaker 1: your salary and then you have your investment salary. Your 248 00:14:53,120 --> 00:14:56,120 Speaker 1: passive income of dividends. And then this is the cool 249 00:14:56,120 --> 00:14:57,600 Speaker 1: thing and this is what I love so much about 250 00:14:57,600 --> 00:14:59,880 Speaker 1: this idea and this strategy is once the mortgage is 251 00:15:00,080 --> 00:15:03,920 Speaker 1: actually paid off, you still have that same share portfolio 252 00:15:04,280 --> 00:15:08,040 Speaker 1: which can continue on generating income, paying income to you 253 00:15:08,520 --> 00:15:11,360 Speaker 1: and supporting your lifestyle and you know, your long term 254 00:15:11,480 --> 00:15:15,600 Speaker 1: financial independence. Like, how cool is that? So the other option, 255 00:15:15,720 --> 00:15:19,280 Speaker 1: option B, is where the shares become the future deposit. Now, 256 00:15:19,400 --> 00:15:23,040 Speaker 1: admittedly this is for children with a longer time frame horizon, 257 00:15:23,200 --> 00:15:26,120 Speaker 1: like you know, seven to ten years or more, because 258 00:15:26,240 --> 00:15:30,120 Speaker 1: obviously portfolios, share port follows are highly volatile and they 259 00:15:30,160 --> 00:15:32,640 Speaker 1: are a long term strategy. But what you are doing 260 00:15:32,760 --> 00:15:35,800 Speaker 1: is creating an environment where there is long term capital 261 00:15:35,840 --> 00:15:38,880 Speaker 1: growth opportunities and you can reinvest all of the dividends 262 00:15:38,920 --> 00:15:42,560 Speaker 1: for compounding growth and it later can be accessed that 263 00:15:42,680 --> 00:15:45,040 Speaker 1: is sold down and used as a deposit to help 264 00:15:45,080 --> 00:15:48,880 Speaker 1: purchase the property. Obviously there'll be capital gains tax implications 265 00:15:48,880 --> 00:15:51,520 Speaker 1: as well, but this is definitely a way of potentially 266 00:15:51,560 --> 00:15:54,520 Speaker 1: creating a huge deposit. And I know Peter Thornhill's son 267 00:15:55,040 --> 00:15:58,400 Speaker 1: actually did this. He sold down his share portfolio, which 268 00:15:58,520 --> 00:16:02,640 Speaker 1: basically meant he had a tiny, tiny, mortgage because his 269 00:16:02,760 --> 00:16:04,720 Speaker 1: share portfolio is worth so much and he actually end 270 00:16:04,840 --> 00:16:06,640 Speaker 1: up buying all the shares back at a later date. 271 00:16:06,640 --> 00:16:09,560 Speaker 1: But that's a conversation for another day. If you were 272 00:16:09,600 --> 00:16:11,640 Speaker 1: to do something like this, you know, particularly if you've 273 00:16:11,640 --> 00:16:14,440 Speaker 1: got really young children, this could be really powerful because 274 00:16:14,440 --> 00:16:16,280 Speaker 1: obviously they're not you know, a seven year old is 275 00:16:16,280 --> 00:16:17,680 Speaker 1: not going to go and buy a property, but this 276 00:16:17,760 --> 00:16:20,320 Speaker 1: could work for them and as they approach that time 277 00:16:20,360 --> 00:16:22,920 Speaker 1: where they're wanting to take over the share portfolio, you know, 278 00:16:23,000 --> 00:16:25,640 Speaker 1: teaching a child about the importance of patients and education 279 00:16:25,760 --> 00:16:30,680 Speaker 1: and understanding markets fluctuate shares are highly volatile, so as 280 00:16:30,720 --> 00:16:33,000 Speaker 1: I said, it's not a short term strategy. But what 281 00:16:33,040 --> 00:16:37,360 Speaker 1: this does is it helps build resilience and financial confidence. 282 00:16:37,480 --> 00:16:41,080 Speaker 1: Is incredibly empowering. And here's the key point. If a 283 00:16:41,320 --> 00:16:46,200 Speaker 1: child can't stay invested through a market downturn through a 284 00:16:46,240 --> 00:16:49,320 Speaker 1: share portfolio, they sure as hell are not ready for 285 00:16:49,440 --> 00:16:53,240 Speaker 1: a thirty year mortgage. So that's really something to think 286 00:16:53,240 --> 00:16:55,400 Speaker 1: about whether actually are you going to help your child 287 00:16:55,480 --> 00:16:57,240 Speaker 1: or you're actually going to hinder your child by trying 288 00:16:57,240 --> 00:16:59,840 Speaker 1: to push them into the property market, particularly if they're 289 00:16:59,880 --> 00:17:03,320 Speaker 1: not ready yet. From a parent's perspective. I think this 290 00:17:03,440 --> 00:17:05,920 Speaker 1: is one of the cleanest ways to actually help a 291 00:17:06,000 --> 00:17:09,800 Speaker 1: child because there's no guaranteur risk, there's no property entanglement. 292 00:17:09,840 --> 00:17:12,440 Speaker 1: You've got really clear boundaries. For example, if the child 293 00:17:12,440 --> 00:17:14,199 Speaker 1: does want to buy a property, that's okay, they can 294 00:17:14,280 --> 00:17:17,119 Speaker 1: keep building their share portfolio. Obviously, it's easier in your 295 00:17:17,160 --> 00:17:22,440 Speaker 1: cash folks, You're not having to service you know, interest repayments, strata, counsel, insurance, 296 00:17:22,440 --> 00:17:24,680 Speaker 1: all all of those wonderful property costs. And it's also 297 00:17:25,000 --> 00:17:29,520 Speaker 1: easier to support multiple children fairly. Imagine you know, helping 298 00:17:29,560 --> 00:17:32,119 Speaker 1: three children build a fifty thousand dollars share portfolio, and 299 00:17:32,320 --> 00:17:35,359 Speaker 1: that's now actually doable, rather than having to pull out, 300 00:17:35,520 --> 00:17:37,280 Speaker 1: you know, one hundred and fifty thousand dollars from your 301 00:17:37,280 --> 00:17:40,440 Speaker 1: mortgage redoor facility. And this is where like parental help 302 00:17:40,480 --> 00:17:43,760 Speaker 1: can actually turn to a partnership in discipline, not at 303 00:17:43,760 --> 00:17:47,800 Speaker 1: about being bailout or entitlement. One final piece that I 304 00:17:48,040 --> 00:17:50,439 Speaker 1: just cannot help myself but address right now, and that 305 00:17:50,560 --> 00:17:53,840 Speaker 1: is the relationships. So I guess this is the conversation 306 00:17:53,960 --> 00:17:56,920 Speaker 1: around the legal reality and how it would work with partners. 307 00:17:56,960 --> 00:17:59,280 Speaker 1: So if your child was to go and get a property, 308 00:17:59,520 --> 00:18:01,920 Speaker 1: how would it work if the child at a child 309 00:18:01,920 --> 00:18:03,800 Speaker 1: of course partners up and they have in a de 310 00:18:03,880 --> 00:18:07,280 Speaker 1: facto relationship, how does that impact the asset pool? You know? 311 00:18:07,440 --> 00:18:09,720 Speaker 1: And then of course what happens if they separate? You 312 00:18:09,760 --> 00:18:12,359 Speaker 1: know who owns? What are their clear boundaries in place? 313 00:18:12,400 --> 00:18:15,320 Speaker 1: You know what's actually protected here. You hate to help 314 00:18:15,400 --> 00:18:18,000 Speaker 1: your children out and sacrifice so much yourself to then 315 00:18:18,200 --> 00:18:21,480 Speaker 1: watch half of it being taken away through a nasty breakup. 316 00:18:21,600 --> 00:18:25,680 Speaker 1: You know, love is emotional, but property is legal, and 317 00:18:26,000 --> 00:18:29,320 Speaker 1: never confuse the two. And this is why getting professional 318 00:18:29,440 --> 00:18:33,720 Speaker 1: legal advice, clear documentation, you know, clear boundaries and you 319 00:18:33,760 --> 00:18:37,879 Speaker 1: know update state planning are essential, particularly when you're helping 320 00:18:37,880 --> 00:18:41,520 Speaker 1: your children out financially supporting add up children into the 321 00:18:41,560 --> 00:18:44,639 Speaker 1: property market. It definitely can be a beautiful thing, but 322 00:18:44,800 --> 00:18:48,560 Speaker 1: only when it's done thoughtfully and with everybody's long term 323 00:18:48,600 --> 00:18:51,879 Speaker 1: interests upheld at all times. But of course, if you'd 324 00:18:51,920 --> 00:18:54,320 Speaker 1: never come at the cost of your own financial independence, 325 00:18:54,760 --> 00:18:58,399 Speaker 1: your own financial wellbeing, or even your own peace of mind. 326 00:18:58,480 --> 00:19:01,320 Speaker 1: I mean, your children have the benefit of time, and 327 00:19:01,359 --> 00:19:04,080 Speaker 1: you also have the responsibility to make sure you take 328 00:19:04,119 --> 00:19:07,800 Speaker 1: care of yourself. The best financial decisions are ones that 329 00:19:07,840 --> 00:19:12,000 Speaker 1: are made when the support is intentional, is disciplined, and 330 00:19:12,160 --> 00:19:17,359 Speaker 1: its values aligned, not fear driven. And to answer this question, 331 00:19:17,400 --> 00:19:19,880 Speaker 1: there is no single right answer, but there is most 332 00:19:19,960 --> 00:19:23,920 Speaker 1: definitely a right process and that's where the real financial 333 00:19:23,920 --> 00:19:28,000 Speaker 1: confidence begins. So hopefully, to every single parent right now 334 00:19:28,119 --> 00:19:31,280 Speaker 1: listening to this, I've planted a few different seats about 335 00:19:31,320 --> 00:19:34,040 Speaker 1: how you can help your children, what actually might be 336 00:19:34,040 --> 00:19:36,520 Speaker 1: best for your children, and of course how to make 337 00:19:36,560 --> 00:19:41,320 Speaker 1: sure you prioritize your own financial independence at all times. Now, 338 00:19:41,320 --> 00:19:43,920 Speaker 1: if anybody would like to send through their question for 339 00:19:44,000 --> 00:19:46,399 Speaker 1: start here, I have popped my email address in the 340 00:19:46,600 --> 00:19:50,720 Speaker 1: podcast notes, so please feel free to reach out directly 341 00:19:50,880 --> 00:19:53,760 Speaker 1: to me. And of course thank you everyone for listening. 342 00:19:53,800 --> 00:19:55,679 Speaker 1: If you could leave me a rating and in review, 343 00:19:55,840 --> 00:19:59,160 Speaker 1: I would greatly appreciate it. Thanks again, and I'll see 344 00:19:59,160 --> 00:20:01,320 Speaker 1: you on Monday. Monk warning for sugar mamas