Australian parents are increasingly using technology and digital currencies to pass wealth on to their children, against a backdrop of a rising cost of living and the housing affordability squeeze.
Aleksandar Svetski, who is the CEO of digital currency exchange Amber, suggested that parents should consider modern savings vehicles, which will cater to the future of savings and investment.
Million-dollar pays offs
While there’s nothing inherently wrong with buying a loved one a new toy, the long lasting payoff is not the same.
If a savvy parent put the same amount of money they spend on gifts into the financial world, their children would be set for life.
“I wish my dad bought me a bit of Apple stock. I would be set, but they didn’t understand how share markets work. If they just put $50 dollars a side every week in the early days, we would have been benefiting from the technology revolution,” said Mr Svetski.
“Every generation, a new opportunity comes along, and bitcoin is that one. I think the smartest thing parents could do is not buy rubbish that will devalue; buy things with an upside,” he said.
“If the bitcoin experiment actually works out and in 20 years it is a functional global reserve asset or currency, one bitcoin could be worth a million dollars,” he said.
The risks
Mr Svetski believes that with the high degree of risks comes the greater reward.
“[You can] put a small amount aside for things that have a high degree of payoff opportunity but have a low probability of happening,” he said.
“So if they do happen, you make a disproportionate amount and literally that’s what Bitcoin is, an investment for people,” said Mr Svetski.
What’s wrong with old school?
While there is nothing wrong with opening a bank account, minusing off the interest earned on the asset, the equivalent purchasing power is greatly diminished.
With this, the dollars saved become worth less as inflation pushes the price of an asset.
“Money saved in Dollarmite, going out 30 years because of inflation every decade, you lose roughly 30 to 40 per cent of the purchasing power of that money. If you went and saved as a kid, it’s worth less than half what [it’s worth] now than when you saved it,” said Mr Svetski.
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