Many of the people I meet with have the problem of trying to balance their desires within the limits of their financial resources. For a smaller group, their financial position offers them a greater range of opportunities. Provided they prudently manage their affairs they have more than enough to provide for themselves. So the question then becomes, what else do you do with your wealth?
I met with Paul and Maria this week and they fall into the second category.. They have built up a significant cash pool over the last few years and haven’t been able to decide how best to invest it. More recently they have inherited further funds, and now have enough money that they can stop work and live off their investments.
But Paul and Maria have a young family and they want their kids to grow up seeing their parents working. The believe it is important to be positive role models for them, to help them learn the value of money and the importance of working to achieve your goals.
With this in mind, they don’t want to flaunt their wealth. Rather, they want to honour the source of it (Paul’s father) by investing it wisely so that they and their children are always financially secure.
Their ability to invest for a long period provides them with an opportunity to make a significant impact on their family. This needn’t stop with just their children, but can extend through multiple generations if managed prudently and structured appropriately. Using modelling we were able to quantify this, providing them with the tools to make decisions based on an understanding of the long term implications of those decisions. Importantly they now understand that time is on their side and so they don’t need to take big investment risks to achieve these outcomes.
The other important consideration was structuring their assets to protect them, both now and in the future. A concern of many parents is what happens to money they give to their adult children in the event their son or daughter gets divorced? While not an issue for Paul and Maria at this stage as their children are still in primary school, time will pass quickly and it will become an issue, and it is far easier (and cheaper) to plan for this at the outset.
Ultimately, Paul and Maria now understand the path they are on and they are confident in what they can achieve for themselves and future generations of their family.