As a parent, you’ll want to ensure that your children have the resources they need to succeed and be secure, especially in times of uncertainty. A financial nest egg is a sum of money or a valuable asset that you can set aside to duly provide them with financial security for the future.
Your nest eggs will give your children a solid foundation to realize their life goals without the stress of financial instability, and having access to them in the future may help you deal with problems like old age and sickness as a family. But what types of financial nest eggs are out there, and which type should you choose? Below are some of your most sensible options:
1) Savings Accounts
A savings account is a straightforward and secure way to start building a financial nest egg for your children. High-interest savings accounts, in particular, will allow you to make regular deposits, and, over time, the funds will accumulate with the benefit of compound interest. The funds in a high-interest savings account can provide your children with a substantial amount of money for future needs, such as their education, starting a business, or buying a home.
If you’re based in the country, it’s a good idea to look into the high interest savings Philippines banks offer. Maya Savings, for one, has a base interest rate of 3.5% p.a. and can go all the way up to 15% p.a. through some missions. If you create a Personal Goal account, this can increase to 4% p.a., and if you have a Time Deposit account, this can reach 6% p.a. Savings accounts are ideal for their low risk, making them suitable for families seeking a stable and accessible option for building future wealth.
2) Educational Plans
For parents specifically concerned about covering future educational expenses, an educational plan will be ideal. These plans can help your children pursue their academic goals without financial stress.
If you can invest in an educational plan early on, you can also take advantage of lower premiums and potentially higher returns on it. With this strategy, you can give your money time to grow as your kids progress through the educational system. This type of financial nest egg is particularly beneficial if you are certain that your children will pursue higher education.
3) Investment Accounts
Opening investment accounts, such as mutual funds or stock portfolios, can offer your children the potential for higher returns compared to traditional savings accounts. These accounts involve investing in various assets, which can grow in value significantly over time.
While investments come with higher risks, they also offer the potential for substantial growth, making them suitable for families looking to maximize their financial legacy. You can work with a financial advisor to choose the right investments based on your risk tolerance and financial goals.
4) Life Insurance Policies
Life insurance policies can provide financial protection for your children in the event of your untimely death. Certain policies, such as whole life or universal life insurance, accumulate cash value over time, which can be borrowed against or withdrawn under specific conditions.
Pay the regular premiums that come with your policy, and you can build a financial safety net that can cover a variety of your children’s needs, such as living expenses, education, or future investments. This option is ideal for families seeking to ensure long-term financial security and peace of mind.
5) Real Estate
Real estate properties typically appreciate over time, providing a source of wealth that can be sold or rented out for income. Investing in real estate is a smart move if your goal is to leave a valuable long-term asset to your children. If they don’t end up selling or renting out the properties, your children can always use them to house their own future families.
6) Trust Funds
A trust fund allows you to set aside assets for your children with specific instructions on how and when the funds can be accessed. This ensures that the money is used for its intended purpose, such as education, buying a home, or starting a business.
Establishing a trust involves working with a legal professional to set up the terms and manage the assets. Trust funds are particularly beneficial for families who want to maintain control over how their assets are distributed and used.
7) Retirement Accounts
While primarily intended for retirement, some retirement accounts can be passed on to beneficiaries, providing them with financial security later in life. Upon designating your children as beneficiaries, you can ensure they receive the funds upon your passing. This can help them with their retirement planning or other financial needs. Contributing regularly to these accounts and managing them wisely can help you build a significant nest egg for yourself, your partner, and your kids.
8) Business Interests
Lastly, if you own a business, leaving your business interests to your children will be a great way to ensure for them a source of income and a valuable asset that speaks to your family legacy. This can also offer your children with entrepreneurial inclinations the opportunity to continue and grow the family business. To prepare for this, involve your children in the business early on and teach them the necessary skills and knowledge to run it.
No matter which nest egg you choose, you won’t regret your effort to make sure your kids have financial stability and opportunities to grow your wealth in the future. Take comfort in the fact that you’ll have laid a strong foundation for the next generation’s future well-being and given your kids a better chance to eventually pay it forward themselves.
Views: 7