How Grandpa Helped Michael Become A Property Investor

Michael had always been best buddies with his Grandpa.

investing an inheritance

Grandpa’s Little Mate

From the times they spent fishing and hunting together, some of Michael’s fondest childhood memories was listening to his Grandpa tell stories about his life and adventures.

Grandpa had also taught Michael some wonderful lessons which he still applied to this very day. It was his grandfather that taught Michael the true value of hard work and was the only person in his family who took the time to explain how important it was to be frugal with his money. To never spend more than you earn.

By the time Michael was 25 he was earning $120,000 a year in his job, had $50,000 in savings for a future home deposit as well as taking an overseas holiday every year.

His Grandpa, who had died a few years earlier, would have been proud.

A Surprising Gift

A few days after his 25th birthday, Michaels mum came to see him. His Grandpa had left him $100,000 in his Will.

It came with two stipulations, he wasn’t to know about it until after he turned 25 and the only way he was allowed to use the money was to invest it. He couldn’t use it to buy a home.

Luckily, Michael was a client of mine and we already had the basics in place, Good insurance coverage, a well managed Super portfolio with just under $50,000 in it and his previously mentioned savings for his home deposit.

The Strategy

Michael wanted to honour his grandfathers gift as much as he possibly could. So after a lengthy discussion he decided to proceed with our recommendation to use the $100,000 gift and combine it with his other Super to set up a Self Managed Super Fund (SMSF) and use it to buy an investment property.

We purchased a property for $300,000 which had it’s loan paid for by the rental income, some tax advantages and his employers compulsory super contributions.

Because of this strategy we were able to reduce the personal super contributions he’d been making and increase his savings so he could buy his own home sooner.

We were both pretty sure Michaels Grandpa would have been very proud.

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