澳洲Australia property Where would you put $10k for a young chil


在澳大利亚 I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo


My children (4 & 8) are about to receive $10k each in an inheritance from their great-grandmother. We're thinking about how to manage this in the best way possible. Our nephews (7, 12 & 14 are also in the same generous boat)

Is it insane to think of a property purchase? As parents we can contribute to holding costs as necessary.
In shares...?

And in what sort of legal ownership structure is best? - Our name, In Trust For... or something completely different?

Advice, recommendation of advisors and personal experiences would be welcomed.
Thanks, Luke  

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$10K is not going to get you into property.
They don't need the money for at least another 10 years, in the case of the 8 year old.
I'd buy 3 - 4 different shares.
They will get dividends each year that could be spent on what they want or re-invested.  

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10k might not but 20k would.  

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Bank of Dad

My kids (9 and 13) put their money in the “Bank of Dad”.:)

My son originally had a CBA account with a couple of thousand dollars balance. When he got his annual statement he was so disgusted to see such a pitiful amount of interest earned over the year.:mad:

I then told the kids they could loan the money to me (ie. put it in the Bank of Dad) and that I would pay them the same interest rate as my bank charged me (ie. LOC interest).

The kids are now happy with the arrangement and from time to time want to see their current balance in the spreadsheet I setup for them. They occasionally make deposits with their Xmas and Birthday money and they are also learning the value of compounding.:D

It is a shame that kids don’t get enough financial education at school and that the products offered to children by the big banks are so pathetic.:(  

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Thanks for your replies.
Both kids already have "bank of Dad" accounts with $900 & $700 in, 8 year-old has a well thought out plan... save to buy a motorbike (almost there), then a car, then a house...

But with this windfall inheritance, investing for a 10-14 year timeframe together could produce a wonderful result with a little help from us. I was always imagining putting their funds together, not separately. Leverage means that even if that house only doubles in value in ten years, they could easily have 50%+ equity in a cheap home in our area, which split 50:50 would have to be worth far more than invested only in the bank or shares.

Propertunity, I don't need this to "get me into property". I'm happy to call on my equity/funds to "get them into property" with this inheritance. Are you seriously suggesting you couldn't find something under $200k in your area with reasonable prospects...

The question is how: (structure/legals) Once again - has anyone done this before?  

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Just check out all the scenarios.

Putting their money into property may lock them out of any future FHOGs that they may wish to take advantage of.
What if someone sues Luke Inc.? Are the children's investments at risk?
What are the tax implications?
Stamp duty going into the investment may chew up most of their cash.
What if Luke Inc. needs to sell before the children want to?
etc etc.  

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I would buy them shares in CBA or some such, with the dividends franked so they have a tidy little nest egg when they want to access it for something like a house deposit.  

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Luke said: ↑
Propertunity, I don't need this to "get me into property". I'm happy to call on my equity/funds to "get them into property" with this inheritance.Click to expand...
It reads poorly, sorry. I meant, $20K will not get them into property. It was a generic you, not a Luke you. :)  

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$10k cash in a well paying 36+ month term deposit and repeat.  

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Convert the 10 K into real money

GOLD  

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Luke said: ↑
Thanks for your replies.
Both kids already have "bank of Dad" accounts with $900 & $700 in, 8 year-old has a well thought out plan... save to buy a motorbike (almost there), then a car, then a house...

But with this windfall inheritance, investing for a 10-14 year timeframe together could produce a wonderful result with a little help from us. I was always imagining putting their funds together, not separately. Leverage means that even if that house only doubles in value in ten years, they could easily have 50%+ equity in a cheap home in our area, which split 50:50 would have to be worth far more than invested only in the bank or shares.

Propertunity, I don't need this to "get me into property". I'm happy to call on my equity/funds to "get them into property" with this inheritance. Are you seriously suggesting you couldn't find something under $200k in your area with reasonable prospects...

The question is how: (structure/legals) Once again - has anyone done this before?Click to expand...
A very simple way would be if you are thinking 10-14 years then just buy into one of the "Big4"Banks,and pick one which has a reinvestment
of the div's in place,put your name your wife and set-up each in their name also on the paperwork you and your wife will have control,we did this when each of our children were born,all you have to think about is if the next ten years go as quickly as the last ten years then when they need the money it will be in place,plus you get to use all the franking credits,one free account as a shareholder,no costs to set-up loans if you hold over 500 units, this is not advice just the way i did it,good luck..
..willair..  

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It really depends on your risk tolerance.

Considering the 10 year+ timeframe, you could put it in a geared share fund. This is higher risk than direct shares, but higher return if the stockmarket does well.

Warning: The investment can easily drop half of its value in the short term. There is no guarantee it will have recovered by year 10, although history suggests that it should.

Note: do you own research. any advice from a forum is only an opinion.

We've got funds for our kids in our own names. Anything else is not worth the trouble considering the amounts involved.  

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If it were me, I would find a managed shares fund with low MER, with a value investing style.

Open the accounts in each child's name, and select the option to have all dividends automatically reinvested.

Talk to your kids about how their money is invested, and encourage them to think about how they might invest it in the future. Don't discount the idea of simply redirecting the dividends to their pocket when they become adults to supplement their working income, leaving the base asset to continue growing.  

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As far as I can tell from the ATO site: A kid can get their own TFN at any age and then as long as the parent is not withdrawing funds regularly, the money is considered as belonging to the kid and they can earn interest up to $2,667 without having to lodge a return.

If I've got this right then assuming 6% pa interest a kid could have up to $44,000 in their account without any tax obligation. They could then draw pocket money of up to $50/wk from the interest without eating into the principal.

I don't know how much money kids demand these days but I imagine this would cover most kids till they start high school (13 yo) at which point they'd have the maturity to compare investment vehicles.  

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Bankwest has a kids savers account, 10% pa, but be sure to read all the T&C.

http://www.bankwest.com.au/kids/

Personally with such a long time frame, I would put it into managed funds, held in the parents' name to get the franking benefits. Instead of starting off with a lump sum I'd also use dollar cost averaging... say investing the $10k into the managed fund over the next 1-2 yrs.  

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Shares in CBA

Term Deposit

Bankwest 10%pa account

Gold

These are all simple and effective ways to educate the kids about how money works. Buying a property is more complicated and far more costly. Keep it simple.  

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tess85 said: ↑
Bankwest has a kids savers account, 10% pa, but be sure to read all the T&C.Click to expand...
That is indeed a good product if you (or the kid) are starting with nothing, as the max deposit is $250 and you cannot put more than $250/m into it. Probably not ideal when starting with a lump sum though.

tess85 said: ↑
Personally with such a long time frame, I would put it into managed funds, held in the parents' name to get the franking benefits.Click to expand...
That's an interesting suggestion - what would the tax implications of this in your name be versus something where the child pays no tax? Are the franking benefits worth it?  

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Interesting, I hadn't thought of that. I"m a number cruncher in my day job so I might draw up the scenarios and have a look. After all, kidlet #1 is coming along so I ought to be researching this too!!  

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Hmm, pertinent link to the ATO website on "children's share investments" here.
http://www.ato.gov.au/print.asp?doc=/Content/11884.htm  

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Interesting thread, I have been meaning to ask the same question.

Working off Example 3 from Tess's link do these two bits contradict each other? ATO Childrens Share Investments

Dividends of $300 are deposited in Talia’s bank account.
Talia must declare the $300.Click to expand...
Does a child who owns shares need to lodge a tax return?
A child who owns shares and who earns more than $3,000 must lodge a tax return.
With the low income tax offset, the amount on which the child does not have to pay tax increases from $416 (the under-18 tax-free threshold) to $3,000. You do not need to lodge a tax return unless the child has earned more than $3,000 or is entitled to a refund of franking credits.Click to expand...
So in the first quote, how do you declare the $300 in dividends if you don't have to lodge a tax return because it is under the $3000 threshold?

Am I right in thinking I can give my young daughter say $2000 as a present and buy some shares in her name that use a Dividend Reinvestment Plan. Because they wont return anywhere near the $3000 threshold then I don't need to lodge a tax return?

Gools  

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