Which is a better investment for your child’s future; private schooling, or an investment property?

AJ Financial Planninginvesting Lifestyle propertyWhich is a better investment for your child’s future; private schooling, or an investment property?

Over the years, I have often heard people ask ‘Should I send my kids to private school, or save the money and buy them a property instead?’

As private school fees continue to rise, the cost from Kindy to Year 12 can be as much as $320,000 per child. Parents who have their child at a public school but are considering private secondary schooling can expect to pay around $171,000. And remember, these figures are unlikely to include any impacts of inflation or ‘extras’ along the way.

Little wonder that today, people are thinking perhaps it’s better to put this money towards the deposit on a house for their child, to give them a head start financially?

The answer to this problem is not that simple. Really, you are making a decision whether to invest in your child’s education (and hence, their possible career path and earning capacity), or to give your child’s a financial head start in life.

Warren Buffett once said, ‘The most important investment you can make is in yourself … You can become … the person you want to be.’

On the flip side, as house prices continue to rise, a head start financially can make life a little easier for young people trying to get a foothold in the market while their earning capacity and savings are still low. It can give them a running start on the compounding impact of property growth while their peers are struggling to save a deposit.

If you had this insight, you could calculate this variance and determine the cross-point of the calculation. The hope is that by sending your child to private school, they will end up earning a high enough income to afford their own home and live comfortably.

Like all decisions regarding your child’s upbringing and future, the reality is they are not made solely for financial reasons, but it’s always interesting to consider the possible financial outcomes.

Please also remember that before embarking on any investment or strategic financial planning decisions, you should always seek professional guidance from a licensed financial planner. Of course, I recommend AJ Financial Planning.

Warren Buffett at Berkshire Hathaway annual meeting, Q&A session, 3 May 2008, quoted in ‘Warren Buffett’s Investment Advice: Invest in Yourself’, Life Compass Blog, 19 April 2010