Real Money Lessons
This idea came from Fred, who’s 75 going on 25 by the way! A career entrepreneur, his passion and energy isn’t slowing any time soon! Neither too are his ideas for leaving his family well prepared for the future, especially his grandchildren.
Fred spent his lifetime building businesses, which like many people has had its fair share of boom and bust successes and failures. But he credits his father’s early advice on savings for where he is today. Fred has well in excess of $2m to fund every last lifestyle wish and medical requirement, so “comfortable” is how he describes his financial position.
And so it was mid last year, having been one of the first to entrust Greenlight to manage his SMSF pension accounts, he asked the question
“Why couldn’t I set up multiple bank and trading accounts in my SMSF, and let my grandchildren manage some of their inheritance today? It would give me an avenue and a vehicle to teach them what I can see they need to be taught – patience, responsibility and accountability.”
Fred wishes he’d taught his own children more, but like most Father’s was busy… And his focus was on ensuring he could provide his kids with the best education, great holidays, a nice house and yard, the list goes on.
But with more time now, and opportunity to reflect on changes in today’s pace of life, he’s desperate to spend time with his grandchildren, teaching them the things he most valued about his own upbringing.
And the idea seriously got the attention of the whole extended family!
How it works:
- Fred’s 100% in retirement, and all of his super monies are fully accessible, tax free.
- He can spend unlimited amounts (though this strategy might be reigned in slightly for people trying to access the Seniors Card post 1/1/15 after Budget Announcements!)
- He can’t contribute any more to super, so the kids have to work within the constraints of holding money in shares vs cash (incl Term Deposits), and expenditure
- Fred can monitor every transaction through Greenlight Online using datafeeds provided by the bank and trading accounts
- Greenlight’s fees are fixed, so any increase in trading activity has no impact on Fred’s costs
- Fred retains 100% actual control of the money within his SMSF
And almost a year on, the scoreboard has become somewhat of a family talking point – OK, competition! Each of the 5 grandchildren, ages ranging 16 to 28, started with $25,000 in cash on 1st August 2013. The total values range from $29,336 to $18,943. Only 1 grandchild has spent any of the money, while the rest are largely focused on cash rates and sharemarket movements. Most interesting is that 2 of the grandchildren in particular, have taken a FAR greater interest in both their super and saving than they have ever indicated before, so it’s been the start of something pretty amazing.
Talk to us more about their progress, or setting up your own arrangements for children or grandchildren. Though every family is different, and there’s some tips and traps to be mindful of, something like this, might just work for you too!
