In this edited ex­tract, Scott Pape tells read­ers how to get their kids into their first home

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SCOTT Pape’s new book, The Bare­foot In­vestor for Fam­i­lies, ex­plains how to set your kids up for life.

The book takes you through the Bare­foot Ten: Ten money mile­stones ev­ery kid should check off be­fore they leave home.

Pape has gone from his renowned “Bare­foot Date Nights” and trans­formed them into “Bare­foot Money Meals”, where you sit down with your kids over din­ner once a week and fol­low the pro­gram.

This ex­clu­sive edited ex­tract is No.10 from the Bare­foot Ten: Your kids must set up a sav­ings ac­count for a home de­posit.


I don’t know about you, but the fi­nal fi­nan­cial yard­stick that I have for my kids is them buy­ing their first home (noth­ing flashy … just a de­cent starter home that they can be­gin build­ing up their eq­uity in).

Then I’ll be like Ge­orge “Dubya” Bush stand­ing on an air­craft car­rier un­der a gi­ant “Mis­sion Ac­com­plished” ban­ner.

(Okay, so maybe that’s not the best im­age …) My think­ing is that if my kids can buy their own home they’ll be liv­ing the lessons of this book …

Most kids ap­proach buy­ing a house the same way as get­ting down a ball that’s stuck on a roof.

They look up, and re­alise it’s too high to grab.

Af­ter a few half-hearted jumps, they stomp their feet and re­sign them­selves to the fact that it’s “im­pos­si­ble” to ever get it back.

(Then they go in­side and eat a smashed av­o­cado sand­wich.)

As the par­ent, what you’re go­ing to do is put up a lad­der, and you’ll hold it for them, as they climb.

But you’re not go­ing to do the climb­ing for them. And you’re not go­ing to push them up with your head up their back­side. “HEAVE!” No, it’s your kid’s choice as to whether they want to climb the lad­der.

Okay, so it’s a sim­ple metaphor, but an in­cred­i­bly pow­er­ful one.

The Bare­foot Lad­der will light a fire in the belly for your kids, and get them into their first home.

It’ll in­cen­tivise them to work hard, and save even harder.

And best of all, it won’t blow a hole in your own fi­nan­cial plan.


Your teen (if you have one) is go­ing to open a sav­ings ac­count for their house de­posit. And they’re go­ing to be­gin saving into it, start­ing now. No ifs. No buts. Even if it’s just a few bucks.

Hang on, didn’t you al­ready do this in your first Money Meal of the Bare­foot Ten?

Cor­rect! Which means you’re al­ready half done with this chap­ter. Good on you!

Yet here’s where we’re go­ing to make it count.

Be­cause at the same time, you’re go­ing to set t up your own “Bare­foot Lad­der dder Fund” where you can start sock­ing money away way to­day so that you can help your teen as they hey climb up the prop­erty rty lad­der. (If you don’t t have a teen yet, even en bet­ter — the ear­lier r you start this, the bet­ter it works.)

Yet it won’t be a hand­out.

Be­cause here’s what’s spe­cial about t this money you’ll save: it’s your money, y, not theirs.

You con­trol it. You ou in­vest it long-term for or max­i­mum growth (I’ll ’ll show you how). You de­cide how much you u give them, and when.

And when you pay y out, you do not give them m a hand­out — in­stead you’re ou’re go­ing to match their sav­ings ef­forts (mo (more on this in a mo­ment). So you’re still help­ing them … yet they’re work­ing fo for ev­ery cent you give them.

This is t the Bare­foot Lad­der in a nut­shell.

Now let let’s talk about how to make it hap­pen.


Back in Cha Chap­ter 1, your teen got their own serviet servi­ette strat­egy. Now I want you to add to the servi­ett servi­ette by hav­ing them open up an­othe an­other linked high in­ter­est saving sav­ings ac­count, and nick­name it “T “Tom’s House De­posit”. A And when they do, they’ll prob prob­a­bly think you’ve fi­nally gon gone off your rocker: ““Awe­some! I have $48 in my ‘House De­posit’ ac­count — o only $499,952 to go!” So ex­plain what it’s all ab about. Tell them that when it comes to get­ting their first home, the ball is on the roo roof … and you’re go­ing to give them a lad­der to help them get there, if they’re willin will­ing to climb it. The There’s power in start­ing someth some­thing, even if achiev­ing it is many ye years away. What you’re re­ally do­ing is putting th the idea on their radar: you’re sett set­ting up the lad­der and show­ing th them the path they have to climb.

Too many whin­ing Mil­len­ni­als cry into their $12 seeded-kale smooth­ies and moan that buy­ing a home is un­fair. Yet cry­ing never got any­one any­where

The fact is, even­tu­ally they’re go­ing to want to own a home … and this is the ac­count they’ll use to save for it.

They may only put in a few bucks a year, but it doesn’t mat­ter — you’ve planted the seed.

And that seed will grow, be­lieve me. Ev­ery time they open their bank­ing app, they’ll see their House De­posit Sav­ings ac­count … and think of the goal they’re saving for. Drip, drip, drip. Too many whin­ing Mil­len­ni­als cry into their $12 seeded-kale smooth­ies and moan that buy­ing a home is un­fair (which it is!). Yet cry­ing never got any­one any­where. By open­ing an ac­count, and start­ing to save, your kid is al­ready climb­ing the prop­erty lad­der — even if they can’t see it yet.


While your teen climbs to­wards their first prop­erty, you need to be right be­hind them, hold­ing the lad­der.

Let them know that for ev­ery dol­lar they save in their house de­posit ac­count you’ll chip in some money. How much? Well, if you can af­ford it, you could match them dol­lar for dol­lar.

How­ever, I fully un­der­stand that most par­ents won’t be able to do that. Yet even if you can only match them, say, 10 cents per dol­lar … wouldn’t it be great if you could say to your kids: “I’m go­ing to give you some mo­ti­va­tion to get you into your first home. For ev­ery dol­lar you save in your house de­posit ac­count, I’m go­ing to award you a 10 per cent bonus. How’s that for a rock­ing in­ter­est rate?”

What­ever you de­cide is the right level of match­ing, I’m go­ing to show you how to start plan­ning for it to­day, so that you can make it a re­al­ity to­mor­row.

Word Up: if you’re stressed about money — be­cause you have credit card debt, or you don’t have your fi­nances un­der con­trol — don’t set up a Bare­foot Lad­der yet. In­stead, the best thing you could do is bor­row my other book from the li­brary and sort your­self out first. How­ever, I’m as­sum­ing if you’re this far into this book, you have a pretty good han­dle on your money. So now, let me show you how to set up your Bare­foot Lad­der Fund.


It’s go­ing to be years be­fore your teen buys a home. Yet when the time comes it’s likely go­ing to cost a fair whack.

So if you do want to be able to give them a help up, my ad­vice is to start a reg­u­lar sav­ings plan now, and in­vest in the high­est re­turn­ing place pos­si­ble: the share mar­ket.

Now there are al­most as many ways to in­vest in the share mar­ket as there are shows on Net­flix:

You can open up an in­vest­ing ac­count in your own name, and sign up to a man­aged fund with the likes of in­vest­ment gi­ant Van­guard, or you can down­load an in­vest­ment app like Raiz, or you can buy shares in Bare­foot favourite Aus­tralian Foun­da­tion In­vest­ment Com­pany (AFIC).

How­ever, if you and your part­ner are earn­ing over $37,000 a year (or you plan to be do­ing so at some stage), I’d rec­om­mend you set up your Bare­foot Lad­der Fund with an in­vest­ment bond, which pays tax at a lower rate than you will.

Hang on, what’s an in­vest­ment bond?

Let’s clear this up once and for all … you might have heard of bonds be­fore: gov­ern­ment bonds, war bonds, James Bond. Well, an in­vest­ment bond has ab­so­lutely noth­ing to do with any of these.

In­stead, it is sim­ply an ac­count where you in­vest money long-term (10 years plus) into a man­aged share fund.

In­vest­ment bonds have some very good ad­van­tages:

They’re an easy-peasy way of reg­u­larly in­vest­ing small amounts of money into shares, via a reg­u­lar di­rect debit monthly sav­ings plan. You can in­crease your yearly con­tri­bu­tions by 25 per cent each year.

Any­one — par­ents, grand­par­ents, fam­ily, friends — can con­trib­ute.

And best of all, they’re re­ally sim­ple — just “set and for­get”. You don’t even have to worry about in­clud­ing any­thing in your tax re­turn be­cause it’s a “tax-paid in­vest­ment”. (To be ex­act, tax is paid on the in­vest­ment in­come and re­alised gains at a rate of 30 per cent, by the bond is­suer — not the in­vestor.)

They have the le­gal power of a “real” trust fund (like Paris Hil­ton has) with­out go­ing through the sig­nif­i­cant cost and has­sle of set­ting one up (the money in the in­vest­ment bond by­passes your will and goes straight to your nom­i­nated ben­e­fi­ciary).

So, which in­vest­ment bond should you choose?

It’s fair to say that there are a lot of ter­ri­ble in­vest­ment bond providers in the mar­ket. The worst are a com­plete rip-off, like the Aus­tralian Schol­ar­ships Group (ASG).

Ac­cord­ing to my re­search, at the time of writ­ing, the three cheap­est in­vest­ment bonds (in no par­tic­u­lar or­der) are: Gen­er­a­tion Life LifeBuilder Bond; AMP Growth In­vest­ment Bond; Aus­tralian Unity Life­plan In­vest­ment Bond.

Hon­estly, there’s not much that sep­a­rates these three — the main thing be­ing that each re­quires slightly dif­fer­ent min­i­mum open­ing bal­ances and charges dif­fer­ent fees.

Again, I get no com­mis­sions, no kick­backs and no footy tick­ets — this is just my re­search. You should do your own.

My sug­ges­tion? Call them all up and ask about their fees, their min­i­mum in­vest­ment amounts, their rules and how to set up the bonds.


Af­ter you’ve se­lected your bond provider, you’ll need to choose where you want your money to be in­vested, just like in your su­per fund. My ad­vice? Since you’re in­vest­ing for 10 years or more, you’ll want to in­vest 100 per cent into shares. This op­tion will usu­ally have “shares” in the name, though providers of­ten use more fancy names, like “Spe­cial­ist Aus­tralian Shares”. If you’re un­sure, check the prod­uct dis­clo­sure state­ment or give them a ring.

And one more thing on bonds: all bonds have a num­ber of rules, so check the fine print be­fore you in­vest, or talk to a li­censed fi­nan­cial ad­viser who can ex­plain it to you.

Yet I’m sure you still have ques­tions, so let’s talk.


It’s to­tally up to you, and how much you think you’ll need … and how many bloody lad­ders you’ll need to put up!

There are min­i­mum amounts you’ll need to start an in­vest­ment bond, which varies (from $100 up to $1000).

Af­ter that, you can set up an au­to­matic sav­ings plan (say $100 a month, which is $1200 for the year). Though, it varies by bond provider, so it pays to call them up and ask.


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