How much should I set aside monthly for my child (18 months old) and where would you put the money? - Seedly
 

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SG Budget Babe

Asked by Huanmin Huang

Asked on 14 Aug 2018

How much should I set aside monthly for my child (18 months old) and where would you put the money?

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The most important thing to do would be to max out the CDA account for your child. The dollar-for-dollar matching of savings means that the government will match up to $3,000 when you deposit your first $3,000 in to the CDA account.

Planning for your child's future milestones like university tuition fees might be a decision that you want to take at this point. You can consider an investment portfolio consisting of endowment plan, equities, bonds, etc. Allocation and contribution per month will depend on how much you intend to provide for your child's university education(you may wish to provide part of or fully cover their university education) when the time comes.

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VC
Vicki Chng
Level 6. Master
Answered on 24 Dec 2019

It depends on the plans that you have for him and your personal circumstances.

Do you have enough money for your own expenses?

Is your son healthy (i.e. do you need to set aside money for medical expenses)?

Is he inclined to and academically able enough to go to university?

Once you've set out your answer to these and other relevant questions, you could do an online search to estimate the cost of each of these considerations

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Hwee Kian
Hwee Kian
Level 7. Grand Master
Answered on 24 Dec 2019

It's first and most important to max out the CDA, 1st child just max out $9k, including government's dollar to dollar matching.

Certainly, I think it's also worth investing for child's future education, possible avenues could be STI ETFs, SSB, or even endowment policies.

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I will set aside at least $200 a mth for him

This is not just for children education, but more of a big lump sum for him to use later. In case my children

  1. need to go overseas for university (local uni are cheaper by a lot)

  2. business to start?

  3. or for his marriage and his other family commitments

I will say save 5 to 10% of your income. Save more if you can afford it, but keep it towards your own retirement.

If you can take care of yourself in the future, that would be a great gift for your children.​​​

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Yanisa Koh
Yanisa Koh
Level 6. Master
Answered on 11 Dec 2019

You should max out the CDA for your child. Think about how much education will cost and divide it by the number of years to reach there. You could put it in a high interest savings account if you're not investing it.

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Choon Yuan Chan
Choon Yuan Chan
Top Contributor

Top Contributor (Dec)

Level 9. God of Wisdom
Answered on 08 Dec 2019

Depends on your income level. For me, whatever money that you have managed to save. Next, I will ask what you are saving - is it for the short-mid term (less than 10) or long term (more than 10 years duration) ?

If long term, I would suggest it putting into STI ETF because over the long term, the ETF has been generating positive returns and 2) since it is long term. If short term, consider SSB or those endowment policies which offers you close to confirmed returns like FWD or NTUC income kinds

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At least 5% of your annual income should be set aside for their education.

As always, it is either we earn interest for their education in the future, or pay interest later for their education.

There are various tools in the market for which you can grow your money, e.g. endowment, bonds, equity, or a balanced portfolio. All these depend on your risk appetite and expertise.

Personally, I will choose a managed portfolio that is largely invested in equity. This is also how I earn my first pot of wealth for the downpayment of my car. However, do note that everyone's needs and investment strategies may be different; what worked for me may not work for you.

Therefore, speak with a professional who is capable of advising you on how to grow your money. Then ask to see what he does for himself to ensure that he walks the talk.

Here is everything about me and what I do best.​​​

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You will have to determine your budget and comfort level. I’m afraid no one has the ability to determine that for you.

If you did set up the CDA, that is one avenue that you should not forgo.

Based on:

  • Your budget

  • How long do you intend to save/invest

  • Risk appetite

Endowments, ILPs or Regualr Saving Plans from banks are some of the available options.

Actions leads to reactions/consequences.

Choices available depends on the knowledge you hold.

Get more information to increase your choices and then you will be able to make a decision that is best for you.

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Dawn Fiona
Dawn Fiona
Level 7. Grand Master
Answered on 14 Aug 2018

Depends on what you would afford!

I would first max out the CDA. Then park in my own high-yield bank saving account if I still have money left to earn the bonus interest on. If not, CIMB FastSaver is another good place. Or short-term fixed deposits / endowment plans by local insurers eg. http://www.sgbudgetbabe.com/2017/10/better-than-fixed-deposit-fwd-202.html

or the easiest and pretty risk-free could be Singapore Saving Bonds :)

I personally would invest the money for my child as well, but this depends on your own investment skill, risk appetite and time.

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