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Give Your Child the Best Long-Term Investment

26 Jul 2021

Invest for your child's future | Pauline Teo
(c) Sadie Xiao

Are you still not convinced to start investing for your retirement? What if I tell you that investing is not just aimed at securing your retirement fund but also at securing your child’s future?

Now I know you’re paying attention.

In Singapore (and most Asian countries), parents are too invested in their children’s future, particularly in their education. And I am not an exception!

See also: Should you teach your child to invest?

Who can blame us? We want the best life for our kids. We want them to experience life the most ideal way. We want to prepare them for the time that they’ll be independent enough to look after themselves (or maybe us when we’re older).

You’re probably thinking: “Pauline, I don’t need to have a long-term investment for my child. I already have a savings account for my child’s education.” Or some of you might be thinking aloud: “Hey, I don’t need to invest now. I can do it when my kid turns 18.”

Please stop those thoughts and hear me out. I want to give you clarity on why and how we need to have the best long-term investment for our children.

Why invest for your kids' future

We invest for and in our child’s future because we want to defeat inflation. Given that you’re putting money in the bank to save for your kids’ university fees, do you think that amount is enough when they finally enter the university?

The $10,000 annual tuition today will be non-existent in 5 to 10 years because of inflation. By the time your kids are 21, annual tuition in local universities could range from $20,000 to $40,000. Are you prepared for that?

See also: Easy Ways to Fast-Track Your Financial Freedom

Going to your second point, this is what I have to say. Waiting for your children to reach a specific age, say after they finish high school, before you start to invest won’t give you great returns as compared to when you start now.

This is because the most important thing in investing is TIME. Time allows you to compound interest from your investments; hence, the earlier you start, the higher profits you’ll get.

Oh, and by the way, consider teaching your kids about investing, too. Believe me, it's a life skill that could benefit them a lot.

What’s the best long-term investment for your children

There are a lot of investment options available today. Personally, I recommend investing in stocks as it won’t take too much of your family time. It’s also proven to give you huge profits when done properly.

Maybe some of your relatives will suggest you create a trust fund or put your money in a fixed deposit amount. You can also do these, especially if you prefer lower-risk investments. But remember that in investing, lower risks mean lower returns as well. At the end of the day, the decision is yours.

How to start investing in stocks

Okay, so let’s say you’ve decided to invest in stocks. Before you proceed, do this first: make a plan. Plan what the investment is for, how much profits are you looking to make, and how much are you willing to invest. Then you can find someone to teach you the basics of stock investing to ensure you do it wisely.

Regardless of what you decide to invest in, I urge you to start NOW before it’s too late. Regret has such a bitter taste especially when you know you’ve had the best chance right before your eyes.

See you for my masterclass this week?

~ Pauline Teo