SPECIAL REPORT:

How to Save a House Deposit by Trading Shares

Owning a house is getting further and further out of reach for many Australians. In September 2021, the median house price for all Australia was $994,579, with the median house of Sydney at $1,499,126.
Just a deposit of 10% is $99,457.
Here’s how you can use share investing to help your kids (or yourself) effortlessly save the deposit… while receiving a powerful investment education.

(The following content is not a personal recommendation to buy any of the following companies as I am not taking your personal financial situation into account.)

Are you a parent? 

How are they going to be able to afford it? 

I bet you’ve probably thought about this in the past few years as house prices have sky rocketed. 

Wages across Australia have not kept up with inflation for more than a decade, yet home prices in most parts of Australia (and around the world) have risen 100%. And in some case, more than 200%. 

Housing prices are not about to meaningfully decline. They may plateau or fall slightly, but housing prices, like all quality dollar producing assets, rise over time. How are your kids going to be able to afford to buy a house?  

The following information is not to boast. Far from it. The numbers my kids have saved and earned is small and they are just getting started, but the point is their snowball is rolling. What I want to share below is what every young adult can potentially earn over time. But, it is going to take you, the parent, to get the snowball rolling. 

My wife and I have 3 kids. Luis (23) Jack (20) and Abbey (18). 

Two years ago when Luis was 21, I realised that unless he started to compound money at a faster rate than what he was going to earn in the bank or a managed fund he was not going to be able to afford to buy his own home. 

The reality is that home ownership is becoming unaffordable for many people all around the world. 

In 2020, Luis our eldest son was living in a tiny, one-bedroom flat in Sydney paying $525 per week. That’s $27,300 per year! That’s $81,900 over 3 years. That’s a deposit for a house right there.

In 2020 I decided to open investment accounts for all three kids and I asked them to deposit what cash they had.

Of course, they were initially reluctant to do this because most kids when they are 18 or 20 are not thinking about saving for a deposit for a house, they are thinking about what outfit they are going to wear to the next party. 

So, I told the kids I would capital guarantee any money they invested, meaning whatever they put into their investment account it was never going to be any less than their initial deposit and any upside was always theirs. I got their attention. 

I didn’t care how much they deposited. The point was to get the snowball rolling and get them investing. 

I also asked them to commit to putting into the investment account whatever spare cash they had. 

And the deal has always been, if for some reason they ran out of cash because they had an unexpected bill, we would lend them the money and they could pay us back later. This is yet to occur.

So, we are 18 months on and I wanted to share with you the results

I’m sharing these with you because I want to be transparent in an attempt to inspire all parents to get your kids investing young, get them investing early and get them investing now.  

Forget about trying to get them interested in learning how to invest at a young age, just get them investing. 18 months on and my kids are still not interested in the process, they are simply interested and excited to see how much money they are compounding. 

Abbey deposited $2000 and her account today is $3600. That’s a gain of 80% in 18 months. Abbey has not added to her initial investment of $2000 but is now ready to add another $500 and will soon have a part time job to add money each quarter.

Jack deposited approximately $3000 and his account today is $10,215. Jack is at college in the USA and had a part time job over the US summer and was able to drip feed around $3000 into his account during the summer of 2021. His gain has been a little over 70% in 18 months and Jack is continuing to add around $500 per month to his account. 

Luis deposited an initial $10,000 from his savings and over the past 18 months with his fiancé they have drip fed approximately $20,000 into the account. Their portfolio is around $45,000 with an overall gain of around 50% for the past 18 months. Luis did take a slightly more conservative approach to Jack and Abbey buying an S&P 500 ETF with some of his initial funds. 

What he also did was take up an offer from his employer Lululemon, whereby a percentage of his wages goes towards buying company shares. This investment is now worth $6000 on top of the $45,000 and he never saw or missed the money from his wages.  Luis was able to get an online job with Lululemon, which has allowed him to move back home and he and his fiancé are no longer paying $27,000 a year in rent and any spare cash can be invested instead.

Now, of course, my kids had the old man (me) to guide them into what companies to own that would get their portfolio moving… but I can tell you there was no leverage used, no derivates and no high-risk investments. I simply had them buy exactly the same companies my clients and our Trading Mastery portfolio own.  

What I was able to do, which has had a sizeable impact, was to tell them when to buy the shares and how to apportion their portfolio correctly. This was and will continue to be the key when it comes to their future returns. Knowing what to buy and when to buy more shares. 

But here is the exciting thing…  

If all 3 kids can just continue to add $3000 annually to their investment accounts until they reach aged 30, provided they can continue to earn an average of 15%, which I am very confident they can, their investments will grow to: 

  • Abbey = $114.520.97
  • Jack = $109,558.02
  • Luis = $162,081.60

(This is share price gain only and does not take into consideration dividends they will also receive.)

Adding $3000 per year is conservative, they should be able to add $5000 or more. By 30 they will have earned more than enough for a house deposit if they want to cash out and they will sacrifice very little in terms of their lifestyle along the way. 

What about if they simply continued to add $3000 per year and left the investments to grow until they were aged 50 and earned the same annual return. 

Here is the incredible result.

  • Abbey = $2,607,105.84
  • Jack = $2,509,258.88
  • Luis = $5,554,372.40

There is no question they can add $3000 per year, but some will question if they could achieve 15% per annum. 

Keep in mind if they put their money in an S&P 500 ETF, they will likely achieve 10% per annum on average (as this is the long-term historical average for the S&P 500 over 30 years). 

Do I think I can improve on that 10% by actively picking stocks at the right time and have them earn another 5% over the bench market average each year? Absolutely yes! 

In the past two years, my personal portfolio has grown 90% and their own portfolios grew between 50% – 80%. (Now, the last 2 years haven’t been exactly normal, but if we look at the last decade of my annualised returns and use that as a benchmark, it comes to 21.7% per year). 

The bottom line is they have a giant head start with their returns in the first 18 months and there is one MASSIVE advantage they have going forward. 

They WILL NEVER  have any money managers taking fees every year to drag down their performance. 

Fee gouging fund managers and financial planners take the cream off the cake of every investor yet they add zero in returns over and above the index average, which you can earn every year. 

My kids will NEVER pay these outrageous fees and it will make a massive difference over time to their end returns.

If you are a parent and you care about your kid’s financial futures, then do yourself a favour and DO NOT let them fall into the financial spiral that millions of young Australians are falling into. 

Start the snowball rolling now and get them investing. 

They won’t do it on their own, you will have to show some leadership, but if you read this and do nothing, you’ll be reading this update again next year and wishing you’d done something 12 months ago. 

Get the snowball rolling. Today! 

I’ve included a compound interest calculator below so you can have a play with some different figures. You’ll also find an invitation to join me for an upcoming webinar and training session where I’ll be sharing how to build a portfolio of international growth companies. Be sure to register today. 

Compound Interest Calculator: Discover How Long Will It Take To Save Your Deposit

Calculate How Much You Need to: 

  • Start with 

  • Invest Each Month 

  • And the Return You Need 

…To Save a Deposit 

 

 

Here’s What To Do Now…

If you’re a parent who’s concerned about how your children are ever going to be able to save enough to buy a home in the future, then you’re going to love this. I’ve created a free training below that walks you through the above process in detail, so you can get them on the path to financial independence today! 

I’m going to share with you exactly what I’m doing with my kids right now, to help them earn and save enough money over the next 5 years to be able to afford their own first home. 

I’m going to share with you a process that you can begin with your kids right now, that will allow you to start to drip feeding some money into the financial markets as an independent investor (away from financial planners, brokers and fund managers). Even if you’ve never invested before. 

I’m going to show you how they can do it in an easy, realistic manner that over the course of the next 5 or 10 years can see them achieve some really meaningful gains. 

And by meaningful gains, I mean: 

 

  • Save enough money for that first home buyers deposit (that is often so elusive to so many people because home prices today are simply out of the reach of many young folks)

     

  • Save $100k or more, in the next 10 years (even if they’re just out of school)

     

  • Be well on their way to financial independence and do it by age 30 (so they can not only afford their first home, but compound that money into the future as well).

     

  • Discovering how to compound money in their 20’s could be one of the most powerful things your child learns when it comes to their finances. So, watch this free presentation now and get started.

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