Something I hear quite regularly is that parents are concerned that their kids will never be able to afford a home.
And that is a real concern, one that I share.
As much as we don’t like to admit it the burden will fall on the bank of Mum and Dad to give our kids a leg up.
For my kids, I have a direct debit that comes out for them every week with $20 and then is invested in a growth ETF.
By the time they are 20 that savings would be $20,800, which we all know won’t be enough to get them onto the property market. Even if they are willing to pay Lenders Mortgage Insurance and borrow 95% that would allow them to buy a home for roughly $400,000, which in 20 years won’t go a long way if we continue on our current trajectory.
But, with a low-cost Growth Electronically Traded Fund (ETF), you’d expect to make somewhere between 6-8%, or more, annually on average over that 20 years. Which is an extra $19,244 to $30,248. A total of $40,044 to $51,058.
With that sort of deposit behind them and some of their own savings, you’d think they would be well on their way to being able to own their own property.
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