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Old 12-12-2019, 10:32 PM
 
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This crazy method requires virtually no unique skills...just a basic understanding of finances.

And yes...a $200k investment from parents. Perhaps in a trust so the child can’t touch it for a certain amount of time.

I would submit that by age 25-30 an intelligent young person with a little guidance could have a net worth of $500,000+ and no debt. This could essentially make them self sustaining for life...and rich by 40-50 if they hold on to a few basic principles. The person would also be young enough to still attend college if they so choose.

And let’s face it, who’s the same person at 25 as they are at 18? By 25 most people will have a much better understanding of who they are and where their interest lie.

For a young person that lives at home (or on the cheap with roommates), $200k + contributing $15k+/year of their own money + no debt could pay huge dividends long term. Not to mention the life skills accumulated through being in the working world and understanding exactly how to manage finances.

Look at all the people out here who are 30 with a negative net worth (a worst case scenario for any child of mine). Most will probably be 55+ before they can even imagine what $500k looks like.

For this to work you need a very level headed and practical child that is capable of doing more than working for minimum wage. Something like HVAC, plumbing or good car salesman would be perfect.

You are basically front loading a good understanding of finances/modesty which long term could be way more valuable than college.

If your child succeeds by coming out on the other end with $500k + no debt....well, they will have earned their PHD and most likely have a long comfy life ahead of themselves. They won’t be working a job they hate...they’ll have plenty of time for family/kids...plenty of time to take care of their mind/body, etc.

I guess the most valuable lesson would be how they’ll have to quickly learn the value of a dollar to reach $500k. Once THIS lesson is instilled in a person - money becomes ‘one less thing’ as Forest Gump would say.
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Old 12-13-2019, 01:08 AM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
23,794 posts, read 41,447,473 times
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How / who can cough up $200k for 18 yo? You imply parents could do that.

Alternative, nearly free.... We matched our kids wages into their Roth's age 12-18. Bonus, they learned how to invest and value companies.

We taught them skilled trades. (They designed and built their own homes before they were 16). They also built furniture, rebuilt cars (engines and body work, and paint). Knew how to run a business pre age 16. Did free college instead of high School. So... With a lot of our time and very little money, they had the equivalent of $100k in assets by age 18. But... That is a long way from $200k in available spend (which I think most 18 yo would not be able to manage for financial gain). Need to start them with little +incentive + instruction + role and responsibilities.
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Old 12-13-2019, 01:36 AM
 
18,649 posts, read 4,635,335 times
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Quote:
Originally Posted by eddiehaskell View Post
This crazy method requires virtually no unique skills...just a basic understanding of finances.

And yes...a $200k investment from parents. Perhaps in a trust so the child can’t touch it for a certain amount of time.

I would submit that by age 25-30 an intelligent young person with a little guidance could have a net worth of $500,000+ and no debt. This could essentially make them self sustaining for life...and rich by 40-50 if they hold on to a few basic principles. The person would also be young enough to still attend college if they so choose.

And let’s face it, who’s the same person at 25 as they are at 18? By 25 most people will have a much better understanding of who they are and where their interest lie.

For a young person that lives at home (or on the cheap with roommates), $200k + contributing $15k+/year of their own money + no debt could pay huge dividends long term. Not to mention the life skills accumulated through being in the working world and understanding exactly how to manage finances.

Look at all the people out here who are 30 with a negative net worth (a worst case scenario for any child of mine). Most will probably be 55+ before they can even imagine what $500k looks like.

For this to work you need a very level headed and practical child that is capable of doing more than working for minimum wage. Something like HVAC, plumbing or good car salesman would be perfect.

You are basically front loading a good understanding of finances/modesty which long term could be way more valuable than college.

If your child succeeds by coming out on the other end with $500k + no debt....well, they will have earned their PHD and most likely have a long comfy life ahead of themselves. They won’t be working a job they hate...they’ll have plenty of time for family/kids...plenty of time to take care of their mind/body, etc.

I guess the most valuable lesson would be how they’ll have to quickly learn the value of a dollar to reach $500k. Once THIS lesson is instilled in a person - money becomes ‘one less thing’ as Forest Gump would say.
I think it would have to be in a trust for sure and put the money in a no-load low fee S and P 500 index fund.but i dont think its realistic cuz only rich people could give their kids that much money.and not many people would give them much even if they had the money.
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Old 12-13-2019, 01:43 AM
 
Location: Santa Monica, Ca
7,914 posts, read 4,346,557 times
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Quote:
Originally Posted by StealthRabbit View Post
How / who can cough up $200k for 18 yo? You imply parents could do that.

Alternative, nearly free.... We matched our kids wages into their Roth's age 12-18. Bonus, they learned how to invest and value companies.

We taught them skilled trades. (They designed and built their own homes before they were 16). They also built furniture, rebuilt cars (engines and body work, and paint). Knew how to run a business pre age 16. Did free college instead of high School. So... With a lot of our time and very little money, they had the equivalent of $100k in assets by age 18. But... That is a long way from $200k in available spend (which I think most 18 yo would not be able to manage for financial gain). Need to start them with little +incentive + instruction + role and responsibilities.
Cool story bro!
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Old 12-13-2019, 02:29 AM
 
12,315 posts, read 7,414,943 times
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Quote:
Originally Posted by C24L View Post
I think it would have to be in a trust for sure and put the money in a no-load low fee S and P 500 index fund.but i dont think its realistic cuz only rich people could give their kids that much money.and not many people would give them much even if they had the money.
If the child can’t touch the money until say 25 - that would give the parents a long time to save. Even $100k as a “reward” (not simply giving it for no reason) for financial responsibility would be a huge leg up in life...especially if the person has no debt and has saved a substantial portion of their earnings for 10 years. Being +$300k in your 20s would be something like 99th percentile as far as net worth...a 1%er. It also sets the stage for generational wealth if the same financial principles/“reward” get passed down.

Last edited by eddiehaskell; 12-13-2019 at 02:59 AM..
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Old 12-13-2019, 02:51 AM
 
12,315 posts, read 7,414,943 times
Reputation: 6757
Quote:
Originally Posted by StealthRabbit View Post
How / who can cough up $200k for 18 yo? You imply parents could do that.

Alternative, nearly free.... We matched our kids wages into their Roth's age 12-18. Bonus, they learned how to invest and value companies.

We taught them skilled trades. (They designed and built their own homes before they were 16). They also built furniture, rebuilt cars (engines and body work, and paint). Knew how to run a business pre age 16. Did free college instead of high School. So... With a lot of our time and very little money, they had the equivalent of $100k in assets by age 18. But... That is a long way from $200k in available spend (which I think most 18 yo would not be able to manage for financial gain). Need to start them with little +incentive + instruction + role and responsibilities.
I definitely know it’s not something most parents can do. It would take a high degree of budgeting and strategic planning.

Ideally, I would have enough to match whatever my child could save by age 25. If their net worth is $150k they would then have $300k. $300k at 25 means retirement by 45 if they play their cards right and continue saving...not that hard once the financial ground work is laid and the child has learned to master delayed gratification. I can’t think of a better “gift” than the gift of time and freedom from a debt driven society.

With a high net worth and modest living at a young age, the world is your oyster. One can pursue their passions without worrying if it means $30k/year instead of $100k/year. Some people are so far in the hole debt and lifestyle wise that they need $100k+/year to live...and even then many of them aren’t worth $300k until their mid-late 40s.

My goal would be to have a hard working/financially wise child that can retire by their early 40s if they want to. Needing to work past that age for the money just seems rather cruel to me.
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Old 12-13-2019, 06:34 AM
 
Location: Central CT, sometimes NH.
3,579 posts, read 5,271,972 times
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Our youngest child was not a student. Upon graduation we told him if he wasn't going to school he needed to find a job and go to work full time. He also needed to save the majority of his money while living at home. He and I sat down and developed an investment plan and he opened his own brokerage account immediately after landing his job. One year later he was given one of our cars when we bought a new one and we told him he needed to have the experience of living on his own. He moved into a small studio condominium that we own at 19. We developed a plan for him to assume the operating costs of the condominium ie. association fees, parking, taxes and insurance. He just turned 21 and now has saved $50,000 and is working toward advancement in his banking career that he has been working for nearly 3 years. He also has been paying his own health insurance since he was 19 and is excited to be able to participate in his company's 401k.

All kids need different paths. Not everyone is suited for college. For our youngest, the best plan for him has been an investment in life experience. It has yielded tremendous results in maturity and independence. He recently traveled to Rome on his own and as a person who enjoys art, learning about different cultures and food it was a great life experience.

Our investment was the small cost of the condo we own and a used car. The rest has been mostly guidance at this point when asked.

Any investment needs to be measured. I would be concerned about setting up too much for a child in an account. It could cloud their views of how hard they need to work and give them the false impression that they could kick back. Everyone needs skin in the game in my opinion.
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Old 12-13-2019, 08:32 AM
 
3,009 posts, read 1,968,807 times
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I don’t know what else to say other than “well, yeah...”


$200,000 is an enormous amount of money to receive post-tax early in life. Throw in years of living at home by you subsidizing their expenses...to save more.

Yes, I’d expect a positive outcome with life’s red carpet simply rolled out.

But students don’t spend $200,000 on school in general...and parents doubtfully have that much saved for their kids for college...even using tax advantages vehicles. So yeah, they’d be in a good spot if they just got that.
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Old 12-13-2019, 08:33 AM
 
910 posts, read 239,095 times
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No.
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Old 12-13-2019, 08:48 AM
 
2,102 posts, read 710,072 times
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I've worked in investment management/wealth management for a long time. I've seen parents give kids trust funds many, many times. 9/10 you end up with an entitled kid who doesn't know how to work and fights every step of the way to withdraw more money than they should. Giving someone money (even in a fund that can't be touched until they are 25) doesn't do anything to teach finance. College can be affordable. Send them to a community college for a few years, then transfer into a traditional university and require them to work while doing that. They can graduate with little debt, and take actual courses on finance/accounting/economics that will teach them how to properly manage that money.

From what I've seen in the wealth management industry, kids who are just handed money without having to work for it rarely treat that money properly.
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