In this lesson I learned about the parenthood stage of investing. Parenthood generally makes the parents future orientated. This is a time of increased responsibility, thinking ahead is necessary. That’s because parenthood is a very capital intensive stage of investing, lots more debt and insurance will be taken on by parents than by others. If you look at parenthood as an investment, it is very heavily front loaded, it may not be paid off in a long while. The insurance function shifts after a while, though with children taking care of their parents in their old age. The welfare function has shifted from family to the state over time. The state literally takes care of you like a nanny from womb to tomb.
The savings strategy changes drastically from marriage to parenthood. Costs could be majorly cut in marriage, but after there are kids the strategy is to invest in the children themselves, and hope they don’t bankrupt you before they get through college. That is the strategy. In terms of the legacy or inheritance, this is accumulated before and after the kids are around.
Finally since we must talk about insurance, Dr. North again repeats his suggestion to get life insurance on your children, having had his son die before him.
Connor's corner 