A Strategic Savings Plan

After some deliberation, I've come up with a strategic savings plan that will help both my son and my stepdaughter. It solves several problems particular to our family as well as the general problems of inflation hedging and premiums. The particulars of this plan are as follows:

1. My wife and I buy one sovereign for my son every month here in Porto.
2. We send the bill for this to my son who credits our account from where he lives in Norway.
3. Once my son has at least 30 sovereigns, we let him borrow 1000 Euros per sovereign, or twice their total worth, whichever is greater. This loan is financed in our bank in Porto, with our apartment as security.
4. My son pays down on the loan until the remainder of the loan equals the value of the security.
5. My wife and I take full possession of the security and full responsibility for the remainder of our bank loan.
6. My stepdaughter is then encouraged to buy the security from us in monthly instalments in the exact same way that my son did.
7. My stepdaughter gets a loan from us when she has full ownership of the security, and the above process repeats.

The above scheme will take about ten years to complete. Monthly fluctuations in the price of gold will thus be drowned out by the general price trend. With the security in gold rather than cash, we don't have to worry about currency debasement and inflation. Even hyperinflation will do nothing to wipe out our savings. Furthermore, premiums are only paid during the initial purchase done for my son. When the security passes on to my stepdaughter, we save on premiums.

The timespan involved means that the above plan must be understood loosely. It's a general outline, not an exact plan. Should gold become so overvalued that it is better sold for something else, we'll have to arrange for that. There's also no telling what sort of income our children will have. All sorts of things may pop up, and must naturally be dealt with there and then, when it happens. However, as an outline, it's specific enough to serve as road map. It can be implemented exactly as is.

Finally, it's worth noting that there's very little risk in this for my wife and I. We'll have 50% security in gold and the benefit of social control by virtue of being the parents of the lenders. This fact will no doubt become apparent to our children who will hopefully do this type of planning for their own children, thereby turning this into a permanent feature of our family's saving habits.

Sovereign

By Heritage Auctions for image, Mary Gillick for coin - Newman Numismatic Portal, Public Domain, Link