For people of my generation one of the biggest worries is the fact that it will be difficult for our children to leave home, and live a truly independent life. The biggest problem is that the price of property in many parts of the world is outstripping the pockets of ordinary people.
Every year, things are getting worse. The gap between how much ordinary people earn and the cost of buying a property is widening. My generation is just about managing to bridge that gap.
We know that if property prices continue to rise as they are now there is no chance that our kids will be able to afford their own homes. The only way that our children will be able to find the cash to buy a house is if we lend them a big chunk of money.
When securing a mortgage was far easier than it is now, opening a savings account for each new baby was a good way of giving your child the cash they needed to get started in life. Even now opening a savings account for your child is a good idea. However, the amount of money you can save, and the interest you earn, means the pool of money you can generate in this way is just not big enough. Unless you are able to save a huge amount per month or put it into a high interest account, you are going to fall a long way short of giving your child enough money to get on the property ladder.
Fortunately, there are better, ways for you to save for your children’s future. While visiting the Linley and Simpson website I realized that one of the best ways to do this is to invest in rental property.
The way it works is that you invest the funds you would have put into your child’s saving account into a property that you then rent out. That cash combined with the rent you collect from your tenants is how you pay the mortgage and bills.
You then have several options open to you. The simplest approach is to sell your investment property, and use some of the profit that you make to provide your children with the funds they need to get on the property ladder.
Another alternative is to keep your rental property, and let your children become your tenants. If the mortgage is already paid off, you will be in a position to charge your kids little, if any, rent.
This will give them the chance to experience living in their own home, and have enough cash left to save, and be able to take the next step up the property ladder. It is also possible, with the help of a lawyer, to gradually sign the property over to your children so that they eventually take over full ownership of your investment flat or house. Which approach you take depends on your financial situation, and what the property, tax and inheritance laws are like in your country.
You can find the information you need about investing in your child’s future in this way online. If you live in the UK this article tells you everything you need to know.
The sooner you get started the easier it will be to invest in your child’s financial future in this way. So, if you have not investigated this idea before now, why not take a few minutes today, to go online and do so.
Interesting idea. I think saving for my kids future is so important and I've never considered purchasing a rental property. The risk is certainly higher than a traditional savings account, but so is the potential reward.
My husband and I were just talking about setting our boys up a savings account. I think it's great for them to learn as well as an easy way at birthdays and Christmas that family can give them some money to save and not just to spend too.