The parents already saving for their toddler's house deposit

Peter and Kristie Lockyer are priced out of Melbourne’s property market, but they are determined their three-year-old daughter won’t be.

The couple, who live in south-eastern Cheltenham, started saving a house deposit for Phoebe when she was just two. They put $10,000 into a share portfolio, which has now grown to $11,750.

“We wanted to give her a helping hand in the best possible way,” Peter says.

“I think it’s starting her early and giving her time to build it up, because it all compounds.”

Kristie, a personal assistant at a private school, and Peter, a director at a creative agency, were inspired by Peter’s grandparents to save early for Phoebe. His parents and grandparents put money aside for him as a child and they used this money to buy a modest investment property in Queensland five years ago.

“We weren’t able to afford anything in Melbourne at the time and I wanted to do something similar for Phoebe and any other kids we may have,” Peter says.

“We’d like to buy something for ourselves in the next few years, but it’s quite expensive.

“Melbourne’s such a great city and a liveable place. The market is what it is and there’s not a lot I can do about changing it, so you just have to manage it and adapt to it.

“We just want to put Phoebe in the best possible position we can put her in.”

The Lockyers are hoping to have a total of $30,000 saved for Phoebe by the time she is 16. At that age, they plan to give it to her in instalments rather than gifting it as a lump sum.

“We won’t give it to her as a gift, instead my loose idea is that maybe she’ll get a part-time job and we’ll match what she earns with what we’ve put away for her,” Peter says.

“I’m sure she’ll be very grateful.”

Peter used money from an inheritance and did freelance work to save for the minimum $10,000 required to invest with Six Park, an automated investment service.

Despite house price falls of 8.4 per cent in Melbourne and 9.9 per cent in Sydney, housing affordability remains a source of frustration for home buyers. It has encouraged many to think ahead for their children, says Six Park chief executive Pat Garrett.

“We have a very strong view that the kind of growth portfolio that we construct, if you have a longer time horizon, will have much better growth prospects than a Dollarmites account,” he says.

“Because it’s a long time horizon, most of the accounts that are opened on behalf of kids tend to be in growth portfolios so the investments are going mainly into international shares, Australian shares, emerging market shares and global infrastructure and global property.

“History – and particularly in today’s low interest rate environment – would suggest that a portfolio of growth assets is going to have a much higher likelihood of higher long-term returns.

“Toys are terrific, but there are better, if less glamorous, ways to invest in a child’s future.”