IN GOOD SPIRITS
Firstly, the whisky has not actually been sold yet and no home has been purchased. This deposit was not actually the hard work of Matthew but of his father. The only thing Matthew has done is follow his fathers instructions not to consume it. I wonder how it was stored, I suspect that the 28 bottles have not followed Matthew away to University or any other place he may have lived, they probably remained at his parents home (I am guessing). As a gift it’s a lovely one, as an investment…. Well, there are obvious risks – which no proper investment portfolio would have – concentrated risk and the past, current and future risk of total wipe out. I could literally destroy a portfolio of whisky in minutes. I could not do the same for any investment portfolio.
ROOM WITH A VIEW – TUNNEL VISION VIA BOX
Then there was the case of Jessica Leung who at 29 managed to buy a property worth £450,000 in Bristol, right opposite IBK Brunel’s the SS Great Britain. This, the headlines suggest was done by moving home to save rent and cancelling her gym membership. It turns out that Jessica was able to put down a £90,000 deposit, pay stamp duty and raise a mortgage of £360,000 on her own salary. It turns out that 30% of the deposit was from her father (£27,000) and “family savings” of £53,000 together with her own £10,000 make £90,000. In fact, Jessica had saved £10,000 not really £90,000. An engineering of “I saved the deposit” feat that Mr Brunel might marvel at. Given that she would likely require an income of £90,000 to borrow £360,000 then to be blunt she might have saved rather more.
Do not misunderstand me. I am not berating Matthew or Jessica or indeed their parents. To my mind these stories have rather more to do with making other young people feel inadequate and relieving the sense of guilt (we did absolutely nothing to benefit from property price rises) that the rest of us have from time to time, when we recognise how hard it is. The truth is that the parents were instrumental in raising the deposits in both instances. These sorts of mixed messages are rife – a few months ago young people were chastised for buying lunch at Pret, now they are being told to do so in order to keep it open. The messages are all to do with supporting those in power who clearly have a lot vested in maintaining the property-owning class precisely as it is.
Rather obviously I work with clients to help them become financially independent and many parents want to help their children as these did. However, pretending that because some can that it is just a matter of personal disciplined saving by the young adult is utter twaddle. I expect nothing to change.
You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email firstname.lastname@example.org