How To Help Your Child Become a Millionaire

This post was originally posted on Planner Bee.

Every parent wants their child to have a strong financial future. Becoming a millionaire might seem out of reach, but with smart planning, disciplined investing, and time, it can be achievable. By leveraging compound interest and making use of the right financial tools, you can help your child grow a million-dollar portfolio by retirement. Here’s how.

1. Start saving early

Time is one of the most valuable advantages in investing. The earlier you start, the more your savings can grow.

Encouraging your child to save from a young age helps build good financial habits. As they get older, involve them in financial discussions about money. Show them how their savings and investments grow over time. This will help them develop confidence in managing their financial future.

2. Invest in stocks and funds

Investing in globally diversified exchange-traded funds (ETFs), such as the MSCI World ETF, is a good way to spread risk. These funds give you exposure to different industries and markets worldwide, allowing you to benefit from global economic growth.

If you have children, consider setting up a brokerage account in their name. This can help them learn about investing from a young age. Teaching them how to invest early can build their confidence and set them on the path to financial independence.

3. Make the most of compound interest

The earlier you start, the more time money has to grow through compound interest.

Compound interest is one of the most powerful tools for building wealth. It works by generating returns not just on your original investment but also on the returns that accumulate over time.

For instance, if you invest $5,000 at birth and add $1,200 annually until the child turns 21, that money can grow significantly. Assuming an average annual return of 7% in a well-diversified investment, such as the iShares MSCI World ETF, the investment could reach approximately $1,095,930 by age 60—without needing to add more after age 21.

To illustrate, this is how the power of compounding works:

You can also use this Excel formula: FV(7%,(60-21),0,(fv(7%,21,1200,5000,1)),1)

Simply put, think of compound interest like a snowball rolling down a hill. It starts small, but as it keeps rolling, it picks up more snow and grows bigger on its own. The earlier you start, the more time compounding has to work in your favour. To better understand the effect of compounding, try out our investment calculator.

Pro tip: Patience is key. Avoid withdrawing early as that interrupts the compounding process. Keep your investments diversified to reduce risk and maximise long-term growth.

4. Take advantage of government schemes and grants

Singapore has several financial schemes that can help grow your child’s savings. These programmes provide support for education and long-term financial planning.

Here are some key schemes to consider:

• Baby Bonus Scheme: Offers a cash gift and a matching contribution to the Child Development Account (CDA).
• Edusave & Post-Secondary Education Account (PSEA): Helps cover education expenses, reducing the need to use personal savings.
• CPF Grants: If your child qualifies, these grants can contribute to long-term financial security.

By making full use of these schemes, reduce out-of-pocket expenses and set aside more money for your child’s future. Many parents overlook these government incentives, but taking advantage of them can provide a significant financial boost in the long run. Planning ahead and staying informed about updates can help you maximise these benefits.

5. Maximise CPF contributions

CPF is a great way to save for the long-term. You can use CPF’s Contribution Allocation Calculator to determine how much you can set aside for your child’s future. If a lump sum contribution isn’t possible, small and regular deposits can still grow into a substantial amount over time.

It’s also a good idea to encourage your child to contribute to their CPF once they start working. This helps them build a strong financial foundation early on. Even small voluntary contributions can make a big difference over the years, thanks to compound interest.

6. Utilise the Supplementary Retirement Scheme (SRS)

The Supplementary Retirement Scheme (SRS) offers a way to save on a tax-deferred basis while growing your money through investments. Encouraging your child to contribute to SRS once they start earning ensures additional retirement savings with tax benefits, accelerating their millionaire journey.

SRS also provides flexibility, allowing investments in a wide range of financial instruments, such as stocks, ETFs, and bonds. This can be a great way to supplement CPF savings and diversify retirement income.

7. Set up a trust fund

A trust fund is a valuable way to secure your child’s financial future. It provides structured financial support and ensures that assets are used for key life goals, such as education, buying a home, or retirement. A well-structured trust also protects wealth from mismanagement and external claims, giving parents peace of mind that funds will be used wisely.

A trust fund can also provide protection in case of unforeseen circumstances, such as financial mismanagement or external claims on assets. By setting up a trust with clear conditions, you can ensure that wealth is passed down responsibly.

Pro tip: Work with a financial advisor to customise the trust according to your family’s needs and future goals.

8. Teach financial literacy

A good financial plan is important, but knowledge makes all the difference. Teaching your child about budgeting, investing, and risk management will empower them to make sound financial decisions in adulthood. Encourage them to read financial books, take courses, and practise good money habits from a young age. The earlier they learn, the more confident they will be in handling money.

Make financial learning practical and engaging with hands-on activities such as:

• Giving them an allowance and guiding them on how to budget it
• Helping them track their spending using apps or a simple notebook
• Encouraging them to investing through stocks, ETFs, or a child-friendly investing account
• Playing financial literacy games to make learning fun

Pro tip: Involve them in real-life financial decisions. Let them compare prices while shopping, discuss family budgeting in simple terms, or show them how savings accounts work.

Financial literacy should not be an afterthought—it should be a lifelong skill. The more knowledgeable your child is, the better they can manage their wealth and make smart financial decisions.

Give your child a strong financial future

By implementing these steps, you can help your child build long-term financial security—even reaching millionaire status by retirement. A strategic approach—starting early, investing wisely, and leveraging available financial tools—can transform small contributions into a significant fortune over time. With patience and discipline, you can set your child on the path to lifelong financial security.

Ultimately, the goal is not just to make your child a millionaire but to equip them with the financial knowledge and habits to maintain and grow their wealth. Financial security is a gift that lasts a lifetime, and with the right planning, your child can enjoy a worry-free future.

Read more: How To Teach Your Children Financial Literacy