Financial Education

Family Finances - How can a balanced portfolio help with family planning?

May 17, 2023
Family Finances - How can a balanced portfolio help with family planning?
Money is a stress factor in the lives of many Swiss families. When it comes to financial planning and asset accumulation, couples with children often face particular challenges. In addition to setting aside funds for purchases, such as a new family car, and planning financially for the future, financial planning for a family must also take into account the needs and goals of each individual family member.

In most cases, it is due to inadequate financial provision for the family if the family budget is not sufficient for the small and large wishes. Against this background, careful financial planning for families is crucial to achieve long-term financial goals and to ensure the stability of family finances. A balanced portfolio is the best basis of financial provision for families. Learn useful tips here on how to save and improve your family finances.

Why specific financial planning for families is important

Financial planning is especially important for couples when they are thinking about starting a family. Having a new family is one of the most wonderful experiences in life and brings moments of joy and excitement. However, the responsibility and financial complexity also increases with each child. The more children there are in a family, the higher the expenses for the offspring - and with increasing age, the costs also increase. According to a study by the Federal Statistical Office 1), parents have to reckon with costs of up to 230,000 euros per child up to the age of 25 if he or she completes a course of study, possibly including a stay abroad. But even without studies, every family has a variety of financial needs that can change over the years. Only with strategic financial planning for the family and a balanced portfolio can the maximum benefit be drawn from the disposable income and the money yield optimal returns.

Focus on financial planning for the family

Children make us laugh and challenge us to see the world from a different perspective. They are also able to remind us what matters in life: Love, friendship and family. But when it comes to thoughts about the future, parents are challenged. That's why our team at Marmot supports young families in particular in learning early on about investing and the benefits of a balanced portfolio for the family budget. Whether it is for studies, an apprenticeship, the first condominium or a new car - with a reliable and stable financial investment, you lay the foundation for your family's goals and for a secure future. A balanced portfolio achieves long-term returns with minimized investment risk and is thus optimally aligned to the needs and goals of a family.

When should you start family financial planning?

When the first offspring arrives, couples initially think about the obvious: Purchases for the baby, furnishing a nursery or possibly moving into a larger flat. Nevertheless, you should not put off thinking about the future too much. Especially now, intensive financial planning for the family is worthwhile. Everything that is invested at an early stage can still bring a lot of return for the future of the little family members until they come of age. And don't forget: Most relatives are happy to contribute. In the long run, the little ones will benefit more from money gifts for births and birthdays than from even more toys for the already too full toy box. Child Benefit Money is also part of the family budget and can be partly invested for a smart and balanced portfolio and thus increase.

When does a child account make sense?

If you want to give your child a financial cushion to ease the start of his or her coming of age, you can already transfer part of the family finances into a children's account for inheritance in a tax-efficient way. With this long-term financial provision for the family, the compound interest effect can really pay off. If possible, a children's account should be set up right at birth - this way, the money from the gifts from aunts and grandparents can be invested safely right away. In addition, a children's portfolio registered in the name of the children has tax advantages that will be particularly worthwhile from 2023. The savings allowance this year is 1000 euros per saver and also applies to your offspring. Income from investments such as ETFs, funds or shares is not included in the parents' savings allowance. However, a separate account for the child only makes sense if the money is really intended for the child, because all investments in this account belong entirely to your child. If you prefer to retain control over the financial provision for the family, you have the option of keeping the children's custody account in your own name and transferring the money to your child later. In that case, the tax advantages are missing, but you still have the right to access the capital. Important to know: The transferred assets are considered a gift, so if you make a gift to your own children that exceeds the tax-free amount of 400,000 euros, any gift taxes as well as the earnings limits of the family insurance must be taken into account.

In Germany and Switzerland, there are banks and financial institutions that offer special children's accounts. The Swiss PostFinanz AG offers the possibility of fund savings with its packages SmartKids and SmartYoung. The major Swiss bank UBS also entices with interesting investment instruments on a children's account with flexible payments. If you want to keep a pure gift account for the little ones, you can get good conditions at Migros Bank AG. Regardless of where you want to invest: Compare the overall conditions, which sometimes differ considerably. Our Marmot team will be happy to assist you with any questions you may have.

What is meant by a balanced portfolio?

The balanced portfolio is a stable money investment strategy that combines different asset classes to achieve a reasonable return with little risk. It is thus the optimal choice for investing the family budget. For family finances, the focus is on two aspects: how much money is needed and when does it need to be available? The balanced portfolio is based on a broad diversification of capital across different asset classes and sectors and rests on three secure pillars:

1. long-term return potential

With a mix of different asset classes such as equities, bonds, real estate or commodities, a balanced portfolio can offer attractive long-term return potential with low risk. Different asset classes have different risks and returns and are subject to the normal fluctuations on the financial markets. Nevertheless, shares and funds are still popular investments among German investors and savers 2).

2. risk minimization:

Family assets must be preserved and increased and thus be available to future generations - we are convinced of this. Investments must take into account the family's risk profile to avoid unexpected financial losses. Our financial managers have extensive market knowledge and the necessary overview to make investment decisions that are both high-yielding and safe.

3. diversification

Our financial advisors place great emphasis on spreading the portfolio across different asset classes with different risks and returns in order to smooth out fluctuations. For example, when share prices fall, bonds can provide stable returns or real estate can offer long-term growth. Careful asset class selection, as favored by our experienced managers, provides stable returns and minimizes risk.

Conclusion: What is the benefit of professional family financial planning?

Professional family financial planning helps to manage the family budget optimally and to achieve future goals. Financial management in a family is more complex than for individuals - with the right financial products you can use your assets profitably for the family. It is important to correctly assess your own knowledge and the family's financial situation. Find out now in just a few steps how your money matters stand and take our free Marmot Money Makeover Quiz. Your findings in the process will be of great benefit to family planning. And we'll support you even further by aligning investment decisions with your family's specific goals. So it makes sense to engage our experts for advice and investment. Marmot's financial advisors will help you select assets for a balanced portfolio. We can also help you develop a strategy to increase the value of your portfolio and maximize returns to meet your and your family's financial goals and build a solid foundation for the future.

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The content in the blogs is solely for general information and to help potential clients get an idea of how we work. They are not recommendations that should lead to the purchase or sale of assets and are not investment advice. Marmot.Finance cannot judge whether and how the statements made fit your investment objectives and risk profile. If you make investment decisions based on this blog entry, you do so entirely at your own risk and responsibility. Marmot.Finance cannot be held responsible for any losses you may incur as a result of information contained in this blog entry.The products mentioned are not recommendations, but are intended to show how Marmot.Finance works and selects such products. Marmot.Finance is also completely independent and does not earn money in any form from product providers.

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