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This is a question that many investors are, not surprisingly, asking themselves. But what might surprise some investors is that the answer is not as elusive as it may at first seem.
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Changes to the ASX operating rules to allow fixed income Exchange Traded Funds (ETFs) to trade on the Australian market will open a new means for investors to efficiently, conveniently and inexpensively diversify their investment portfolios.
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News & Commentary
Forget those great expectations 16 Mar 10
What do you expect to leave your children in your estate?
Depending upon your age, a more relevant question may be: What do you expect to inherit from your parents when they die?
A short paper released this week by Rice Warner Actuaries – headed Surviving Longevity – bravely forecasts that the days of the great Australian inheritance, the family home, left by deceased parents to their children, are reaching an end.
This forecast could be greeted by some adult children with shock and horror, considering how inheritance of family homes is so ingrained in the Australian psyche.
The reasoning behind the forecast is straightforward.
The point will be reached, according to Rice Warner, where Australians facing longer and longer life expectancies and inadequate savings can no longer afford to leave the family home to their children.
A 65-year-old retiree can expect to live at least another 20 years – and there’s a 20% cance of living for another 30 years.
“Traditionally, many retirees have liked to pass something through to their children,” Rice Warner observes. “However, we expect this attitude will need to change in the future.”
“Many children are going to be middle-aged when their parents die – some will be pensioners themselves!”
And this part of the paper concludes: “It is more rational to invest in children’s education to improve their earning capacity and then not to plan to leave them an inheritance. This strategy also frees up the family home as an asset for income generation in later years.”
Welcome to the future.
* Written by Robin Bowerman, Head of Retail at Vanguard Investments Australia.
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