Preparing for Baby1’s future is definitely high on our priority list. And when thinking about the future, finances will easily be amongst the first things that come to mind. We too, have decided to start planning for Baby1’s finances early.
Before we talk about our plan, let’s step back in time a little bit to talk what our parents did for us when we were young. One of the things that I think most of our parents in their generation did for their children was to purchase an endowment plan for their children. Typically, such endowment plans will mature in around 20 years. Therefore, parents of their time will easily succumb to the cheap sales talk by insurance agents of their time to purchase such 20 years endowment plan which will mature when “their child turns 20 years old and needs a large amount of money for tertiary studies”.
To our best knowledge, both our parents had bought such plans for us. Not that we discourage such plans, but to us, endowment plans are far too illiquid and the investment returns aren’t really great. Endowment plans are great for parents who do not know how to control their spending habits as it forces them to save on a regular basis. But we feel that we’re relatively prudent people and we can manage our regular savings plan on our own. Furthermore, we’re likely to earn better returns than what those endowment plan offers with far more liquidity.
Now, let’s see our plan for Baby1 so far.
- Start off with a baby savings account. All gift monies (i.e. ang baos) for Baby1 will go directly into this account. So that means gift monies from baby shower, birthdays, Chinese New Year, and scholarships will all contribute to this account.
- We will save all our 50 cents coins for Baby1. Currently, we’re saving 1 dollar coins in our piggy bank as a lifestyle habit. So, we’ll extend this idea and start saving 50 cents coins too for Baby1. And when she grows older, we’ll teach her to save her coins in her piggy bank as well.
- We dedicated one of our endowment plans to Baby1. Dear1 started an endowment plan several years ago (before realizing how much we dun need it). It’ll mature some time when Baby1 is ready for tertiary studies, so it’ll come in handy to pay off the school fees. Any excess will be our gift to Baby1.
Next, things that we will be doing but have not started yet.
- Invest in gold. This will take the form of gold coins for Baby1. The plan is to buy gold coins for Baby1 as birthday presents every year. We’ll start off with small 1/20 oz coins which cost less than $100. As she grows old, we may increase the size of the gold coins. Hopefully, these will appreciate in value over the years.
- Start a regular investment plan. We’re thinking of unit trusts or some kind of index funds. No concrete plans yet, but the aim is for some kind of long term investment that can ride the economic cycles with Baby1’s long investment horizon.
As parents, the goal of all these is of course to enable Baby1 to realize her dreams; to be able to support her until she’s able to support herself; to kick start her journey of life. Hehe… Sounds a bit early to start thinking about such things, but it’s never too early to start planning and saving for the future. And we hope that with these, we’re setting a good example for Baby1 so that she’ll led a financially responsible life as well.