How to make your child/grandchild a millionaire for $66,000

Sep 2, 2020 | Financial Planning, Savings

Michele Carby explains how she helped a client put in place a plan to make his grandchild a millionaire a a cost of just $66,000.

A long standing client and personal friend came bounding into my office the other day full of the joys of life; he had a smile a wide as the Mekong and was as giddy as I have ever seen him. The day before, he had received the news that his daughter had just given birth to his first grandchild and he was ecstatically planning a trip back to the UK to welcome the newest member of his family.

Anyway, after the initial congratulations were complete we sat down and he posed a very interesting question that, with his permission, I believes deserves sharing. He told me he wanted to find a way to make the baby a millionaire and wanted my help to make it happen. I was a bit taken aback as it is not exactly a standard request, but after a chat it became clear that he was not looking to instantly hand over the readies but wanted to put a long term plan in place so that in later life his new granddaughter would not have to worry about her pension and would be able to provide for her family in turn. He wanted to leave a legacy that will provide security for his family long after his lifetime.

That is what I call forward financial planning and excited by the challenge, we started to crunch some numbers. In the end, we found a very workable way to make it happen and it will cost my client under $66,000!

This is how we have structured the plan. My client will deposit $1,000 immediately and then make a contribution of $300 a month, every month until his grandchild’s 18th birthday. That adds up to a total investment of $65,800. We have factored in an interest rate of 6.5%. After the initial 18 year period, no more money will be added but the balance will stay in the investment fund for a further 32 years, accumulating compound interest year-on-year. By the time his granddaughter reaches 50, she will be a millionaire with a total balance of $1,005,919.84!

Now, I know 50 years is a long time but this tale is the perfect illustration of how long term, small, regular savings can mount up to a sizeable sum. In the 50th year of my client’s new super plan, the interest on the balance is set to be over $63,000; almost equal to his entire contribution. This is the power of compound interest at work being reinvested year-on-year and helping the pot to grow bigger and bigger.

What this tale demonstrates above all else is the value of saving early. Time is the key to getting your money to work for you and building a nest egg for the future.

Watch our webinar on Education fee planning and the million dollar baby

Good education does not come cheap. In fact, in the UK, USA and many other premier university destinations education has consistently risen faster than inflation over the past 25 years. There are student loans of course but many expatriate children will not qualify and even if they do can leave your children saddled with enormous debts for most of their adult life.

In this webinar, Michele takes a comprehensive look at education fees and looks at how early planning can help parents support their children financially throughout their education. She also explains the million dollar baby, and how she is helped a client with a plan for a million dollar saving scheme for his granddaughter.


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