Home Finance Rich leaders on financial advice for children: investing, budgeting and inheritance

Rich leaders on financial advice for children: investing, budgeting and inheritance

by Eclipsnews
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Sally Anscombe | Getty images

Entrepreneur Eric Malka had to completely shift his way of thinking when he sold his company and became an investor. Since then he has learned many lessons that he now passes to his children.

When the art of shaving – who founded Malka and his wife Myriam Zaoui in 1996 – was purchased by Procter & Gamble for A reported $ 60 million In 2009, Malka realized that he had to teach himself.

“When an entrepreneur like me is lucky to have a liquidity event, we are confronted with … with managing assets without the right training,” he told CNBC per video call. Investors must concentrate on patience and on long -term returns, while founders of the company often look at a short -term plan, “almost an opposite” mentality, Malka said.

He followed courses on Wealth Management, read books about investing and now has a diversified portfolio of shares, bonds, private equity and real estate, with around 10% assigned to riskier investments. In 2014 he founded the private equity fund strategic brand investments.

The lessons learned when you lose are more valuable than those when you succeed.

Eric Malka

Co-founder and CEO, Strategic Brand Investments

When it came to training his children – sons of 14 and 16 years – about money, the attitude of Malka has been to help them learn from the ground.

“One of the challenges I asked with my teenagers is their conviction that it is very easy to make money by investing via social media and by what they hear from friends,” he said. His older son thought he could generate a monthly return of 20%, which Malka described as ‘very worrying’. So Malka let him invest a small part of his savings, in the hope that it would offer the opportunity to learn – and his son lost 40% of that investment after the trade fautures.

“I hate to set up my child for failure, but sometimes, you know, the lessons learned when you lose are more valuable than those when you succeed,” Malka said.

It is a point that resonates with Gregory van, CEO of the Singapore -based Wealth Platform Endowus. He and his wife have children aged eight, six and three. He said he will teach them that it is important to make mistakes when the commitment seems to be great for them, although in reality it might be small. “The emotional muscle and humility needed to be a good investor is something that people have to develop themselves,” he said.

Children learn to invest

For Daysssi Olarte de Kanavos, president and co-founder of the flag group of real estate company, it is early to inform children about money.

She and her husband have assigned a “low risk” sum of money to each of their three children in high school to choose companies to invest. “Our children chose it AppleAmazonGoogle And Alibaba. All of a great runs had all the great runs. As long as they kept their money on the market and kept alert in their approach, we added to their nestei every year, “she told CNBC per e -mail.

Olarte de Kanavos said that her experience in real estate investment taught her the value of patience. “It has influenced my business approach by emphasizing long -term strategy compared to fast profits,” she said. The mother of three described her own investments in the stock market as “very conservative, to best manage the enormous risks we take in our real estate company.”

Give them an allowance at the latest in the first year.

Daysssi Olarte de Kanavos

President and co-founder, Flag Luxury Group

She stated for children to explain why they want to buy certain shares, because “investing can demystify and make it an exciting and integral part of their education,” she said.

Van said he talks with his young children about the considerations of investing in their own conditions. “I ask them:” If we invest this $ 100 and it will go with $ 70 next year, how will you feel? ” “Do you want to spend $ 100 on a toy today, or were it in 10 years $ 200 when you are 16?” “Via e -mail told CNBC” surprisingly they are very rational and always go for delayed satisfaction, “he said.

Van and his wife have investment portfolios for each of their children, usually consisting of gifts they have received during vacations such as Chinese New Year. “Given their long investment horizon, they are in very diversified, multi-manager, cheap stock portfolios,” said Van, and he shows his children the performance of their portfolios-positive or negative when they ask.

Budgeting and saving for children

Applied advice is very important, Malka said. His focus at the moment is the learning of his children about budgeting, so that they offer a fixed fee per month.

“In the beginning, you know, they would spend in 10 days what they should spend in 30 days … Now I have been doing this for eight months or nine months, now they are managing really well, and I think that’s a skill They do not realize that they are taught, “he said.

“Give them the first class at the latest,” is the suggestion of Olarte de Kanavos. “The aim of compensation is to enable them to make their own decisions about money and to manage the consequences that are accompanied by their choices,” she told CNBC. “As they get older, they learn about saving, the concept of interest and the difference between good and bad debts,” she said.

For Roshni Mahtani Cheung, CEO and founder of media company The Parentinc, long -term thinking is important. She and her husband opened a fixed-deposit account for their eight-year-old daughter for the money she receives on Chinese New Year, and at Diwali she receives a gold coin. “My goal is that she is financially smart, confident and ready to make her own decisions,” said Mahtani Cheung CNBC per e -mail.

Talk to children about their inheritance

A concern for the rich members of Advisory Network Tiger 21 is how and when they have to talk to their children about their inheritance. “They are most concerned about their children who live an independent productive life and do not want knowledge about the wealth they will inherit to distract them or get them off the course,” said founder and chairman of Tiger 21 Michael Sonnenfeldt in an e -mail to CNBC.

About 70% of the members of the network want to wait until their children are almost 30 years old and have established a career to describe what they could inherit and when, Sonnenfeldt said. “However, about 30% of the members want to start working with their children in their late teenage years or early 20s to teach them to become responsible stewards for the wealth they will inherit,” he said. Both approaches are valid, he added.

“I suggest that parents open, valued conversations about money and investing,” said Sonnenfeldt.

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