Money for Time

Hi Future$,

As your pofolio grows you will be busier.

I think you can’t have both unless you delay having kids for at least 15 years. Ask yourself that you want more time with your kids when they are young or you want a better $ life for them when they grow up.

Others may think differently.

Good luck.

Huey

Hi. I was surprised by Hueys reply. 15 years is waaaay too long.
The numbers of infertile couples has increased markedly in the last decade (this is my field of work) and one of the reasons for this is that we are having our kids way after the peak fertility time for women – which is early twenties.
It is possible to do both with having the right attitude (excellent reply peterp) and allowing time for each. I would much rather be home all day with a headache over all my investment properties than coming through the door at 6pm tired and then having to have time with the kids. You can do anything with kids. I took my 7 year old backpacking through europe , everyone thought I was mad but I wanted to see europe before I got too old and of course would never have left my child behind and it was the highlight of my life. Now ten, my daughter comes with me on property inspections, talks about the ‘value’ of a property and can weild a hammer and screwdriver pretty well. She is all excited about a renovation coming up (of course safety is paramount) but I can see that all this is making her into an extremely adaptable and buisiness oriented young thing. So my advice is don’t put anything on hold, go with it, go with the flow and enjoy the ride.
cheers.

Future$ wrote:

‘You’re right, kids ARE adaptable and I certainly see nothing wrong with children learning about investments etc from an early age.’

The most important would be the very simple parental utterances when shopping. The three that dominated my childhood were:

1. ‘we can’t afford that’
2. ‘we don’t need that’
3. ‘it was cheap so I bought it’

These were all influential, though I’ve changed my attitude on some of them since.

In relation to ‘we can’t afford that’, the financial motivation books all tell you to change your thinking to ask ‘how can we afford it?’.

I still don’t like that because I’d rather firstly ask ‘is it really necessary?’. Steve gets at that in his ‘WEALTH’ appendix.

My criticisms of ‘it was cheap because I bought it’ is that if it doesn’t save time, money or deliver some other benefit then it’s no bargain, no matter how ‘cheap’. Also I’d rather have one of something that works well than a pile of 5 (bought cheaply no doubt) that don’t!

These days I think ‘value for money’ rather than ‘cheapness’.

Though this comes right out the bludging-smoking-sobstory-dole-recipient book (as sensationalised on TV), I was also exposed to parental criticism of what silly junk other people put into their shopping trolleys.

The hidden message was that ‘we were different’.
And we had to be to pay off the mortgage on the income being received.

The main weakness was that all of the above continually repeated maxims concerned spending money (and by implication saving it) rather than making it or developing passive income.

In this it sometimes comes as a revelation, even when you have a relative who has done it (for example, start a business, buy the land, sell the business, keep the land, draw rent from the land). For ages you are aware of some individual things he’s done, but you miss the overall strategy or the idea of developing streams of passive income.

Regards, Peter

Hi Peterp, If they come into the world once you are wealthy, they may not observe you scrimping and saving during their youth”.

There is a risk of them: a. turning out spoilt brats who don’t move out until age 30, b. continually asking mum and dad for money, c. with a belief that money comes from trees, d. valuing immediate gratification over long-term investing, e. having less personal initiative, and f. going for ‘safe’ jobs rather than entrepeneurship.

There appears to be a basic assumption here that children born to wealthy parents are spoon fed and do not know the true value of money. My family was listed in the top 100 families in Australia and Who’s and who. I received my first bicycle at the grand old age of 14, before this I walked to school everyday approx 3K’s. I did household chores even though we had domestics and never received pocket money. The only money ever obtained was earned through extra chores.

Future$, only you know how you will bring up your children. It doesn’t matter whether your wealthy or poor, young or old.

Sunshine, Yes infertility is getting higher and there is research to suggest links with age, but you are dwelling on negativity. It doesn’t matter how old you are when you have children. There is research that suggests if you are younger you can contribute more in a physical lifestyle whilst maintaining a closer generation gap. Other research on the other hand suggest older parents are able to spend more time and help children develop more intellectually. The best thing about research and theory is that there are always opposing sides. The same can be said about investing.

C2
“Is it true the more you owe the more you grow until the bank steps in?”

Hi C2: It sounds as if your parents were conscious of their success, knew the values and mindset that gave rise to this, and brought you up in such a manner that those values were transferred to you.

Values are probably the biggest gift that a parent could give, and I’m not sure how common it is for parents to think about subconscious values that they may be transferring to their children. But it sounds as if your parents did!

One way to examine the ‘silver spoon theory’ (which I think has some credence, but clearly not for all families) is to look at the proportion of millonaires who inherited most or all of their wealth.

If this proportion is high, then families are generally good at preserving and transmitting wealth down the generations. On the other hand, if most millionaires are self-made it indicates that inheritance is less a factor.

Page 7 of ‘The Millionaire Mind’ by Thomas Stanley says that 61% of (US) millionaires never recieved any inheritance. Less than 8% inherited 50% or more of their net wealth.

This does not quite imply that millionaire families of the past have had children who’ve frittered away their family fortune, though it is consistent with it.

However given that the early settlers & graziers have had more opportunities to buy cheap land (both agricultural and near cities) than did subsequent migrants, and would have had the benefit of 200 years of compounding wealth, you’d expect that the descendents of these early settlers would be rolling in money. Some may be, but many aren’t. Also a large proportion of Australia’s wealthy are migrants who started with little.

(The Millionaire Next Door goes to some length on this point in the US context)

To really answer whether families are an efficient means of maintaining and transferring wealth down the generations (thus debunking the silver spoon theory) would mean looking at Australia’s richest 200 families 30, 60, 90, 120 and 150 years ago and looking at where their descendents are today.

I confess that I would be somewhat gladdened if most turn out to be ordinary middle-class people as it implies more social mobility and less entrenched privilege.

Does anyone know of any Australian scholarship on this? It might make interesting reading!

Regards, Peter

Hi C2,

You missed my point re age of parents. Im not referring to the age gap and parenting styles but in view of planning family and investments it is important to look at the fact that putting children off to late thirties,early forties which is common now, you may miss the boat alltogether.

IVF (now very commonplace) costs a small fortune, takes time and I hear everyday couples saying ‘if only we had started earlier’, to many it makes all the income in the world pointless.

So my point was, in planning long term investment strategies that include the time frame of having children, to be aware that one may come at the cost of the other. Negative perhaps, but in fact I think positive if you consider what I said, I believe you can do ANYTHING and have kids at the same time. Cant get more positive than that!

Future,

You are obviously thinking of your children in relation to your investing, and others have picked up on that thread, so I’ll make a comment in that vein also.

I don’t have children- but I was one once! Your children will learn from what they see you doing. They’ll see how you treat your fellow man and woman when you invest in property. They’ll learn a lot from you if they hear you say “god, that old pensioner has no idea what his property was worth- I just made a 30K profit!” It just depends on what you want them to learn about investing.

Whatever they learn from your example though, can be neither here nor there at the end of the day- they’ll either follow your lead or rebel! []

kay henry

C2 said:

Kay Henry,
I think you’ve got it in a nut shell with your comment about what your child would learn if they heard about the 30K profit, but in reality how many investors out there would really care about the pensioner. Then again should it matter whether it’s a pensioner, bankruptee or developer? Don’t they all deserve a fair price?
C2

C2- funnily enough, some investors do care about pensioners. Life isn’t just about making money- at any cost- for all of us. It scares me to think about the “reality” that some people *wouldn’t* care about the more vulnerable in life. Property investment does not have to be about exploitation. It can be an interesting pasttime when one is procrastinating at work :o)

kay henry