Building up assets for the offspring


If assets are already available on a large scale or if the income situation and the motivation in this regard allow for ambitious savings, parents can build up assets for their (underage) offspring.

If the invested assets have to be used to finance studies abroad in a few years, the majority of the "university portfolio" should be invested in fixed-interest securities with a maximum remaining term of five years. If, on the other hand, the accumulation of assets is carried out with abstract goals, a share quota of 100 percent is suitable.

The influence of real estate on the investment strategy

Real estate ownership must not be excluded from the conception of a personal investment strategy. It is easy to understand why rented properties are taken into account: These are treated in the same way as open-ended or closed-ended real estate funds and are usually included in the conservative part of the investment strategy.

Investors with real estate holdings should accordingly set up their securities portfolio more offensively and increase the share of equities compared to a situation without real estate holdings.

If the current rental income is reinvested in real estate, this approach can be maintained over a very long period of time.

If instead the rental income is reinvested in securities, the bond portion of the portfolio must be increased over time, because otherwise the overall distribution will grow in favour of the stock market.

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Owner-occupied property and investment strategy

If a property is owner-occupied, it must also be taken into account in the personal investment strategy in The simplest approach to property ownership is the cold rent saved. Assuming that the property is occupied for life, this corresponds to a secure, recurring payment from risk-free government bonds.

In many calculations, however, the cold rent saved is set too high. Evidently important for a correct assessment is the consideration of all costs in connection with the property that would not be incurred in a rental relationship.

This includes, in particular, sufficiently high maintenance reserves for the sooner or later obligatory renovation and modernisation of the property.

A common saying goes:

    The home must be bought twice - once at the time of purchase and another time shortly before retirement.

At that time, the property should be brought into a modern condition. Maintenance reserves can be invested in a securities portfolio and withdrawn at the required time.

Saving equity with securities?

Younger investors in particular are rarely faced with the problem of having to reconcile an existing owner-occupied property with a securities portfolio. Instead, the task is to divide the savings ratio between the loan instalment for a property loan and other asset accumulation.

At an even earlier stage, regular savings are divided between other asset accumulation and the equity for a property.

In principle, it is also possible to save equity in securities. Since the equity capital is needed at a certain point in time or within a fairly narrow time window, interest-bearing securities with suitable maturities are suitable for this purpose. The bond portion of the total portfolio can be temporarily increased for the purpose of equity accumulation.

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