*This is a collaborative post*
It’s never easy to figure out how best to pass a legacy to your children. Life insurance, savings accounts, and products like bonds can all provide a great way for you to improve your child’s future. Alongside this, though, a volatile economy can make it tricky to know whether or not using traditional saving methods is a good idea. To help you out with this, this post will be exploring an alternative; buying property. So, is it worth buying a home for your children?
The Benefits of Buying A Home For Your Children
Being able to give your children something when you pass away can be a good way to make sure that they have a good life. Buying a home can be a great way to lock your savings into something tangible, and there are loads of benefits that come with this sort of option.
- Long-Term Value: While property prices go up and down, the building and land it sits on will always have inherent value. The same cannot be said for money, especially when it is stored with companies that might not be around in a couple of years. This can make a property more secure than regular savings.
- A Milestone: Buying a home is a common milestone that people work hard to achieve, and your children are likely to be no exception. You can give them this gift early in their life, saving them from having to pay rent and lose money. Of course, this can also make things like studying easier, as they won’t have to find their own place.
- A Money-Maker: While money in a savings account will generate interest, it won’t be able to bring in anywhere near as much as you’d make from renting out a property. Being a landlord takes some work, but can be well worth it for the rewards that you will get in return.
- Easy To Sell: Houses are much easier to sell than a lot of other types of asset-based investments. People are always looking to buy homes, giving you the chance to make a quick sale if you spend enough time working on it.
- The Start of An Empire: Becoming a property developer is often a hard process, but this can get much easier when someone already has a home behind them. This can give your children the chance to make a career out of your legacy, or even just a little bit of side income if they want to do something else.
The Downsides of Buying A Home For Your Children
Of course, like any form of investment, buying a home will also come with some downsides. It’s important to keep this in mind before you make the decision to go down this route, ensuring that you have taken everything into account.
- Ongoing Costs: Maintaining a home can cost quite a lot of money, especially if problems develop that you didn’t expect. This can add up over the course of a couple of decades and can end up forcing people to sell the properties they’ve worked so hard to buy. This sort of issue can be overcome if you choose a robust and well-maintained property.
- Buying The Place: It can take a lot of time to save the money to buy a house, and most people choose to use a loan for this. Not only will you have to check things like HDB loan eligibility, but you will also have to make sure that you can afford the payments that will be made against the place.
- Taxes: Inheritance taxes may seem unfair, but they still have to be paid on things like properties when they are inherited. Certain types of savings don’t come with this, and this makes it worth factoring in these costs when you figure out whether or not you can afford your property.
- Risks: Any investment comes with some level of risk. Houses can be torn down by freak weather, natural disasters, and even accidental mishaps, leaving their owners with little show for their work. insurance can help to solve this, but this adds to the costs you have to pay for your place
With all of this in mind, you should be feeling ready to take on the challenge of buying a home for your children. This process can often be well worth it, but you have to make sure that you are prepared for the downsides that can come with it.