1. Time is the most important element in compounding wealth. And it makes sense to start investing for our children to capitalise on their long investment horizon, avoiding the regret of ‘I should have invested earlier’ for the next generation.
2. However, a minor who is less than 18 years old, is not allowed to open an investment account in Singapore. This often results in parents having to invest on their children’s behalf and it can get messy if a parent has multiple accounts already.
3. Unless, you consider topping up your children’s CPF as a way to ‘invest’ or at least get higher interest rates than it would have been with bank deposits. You won’t receive tax rebates and there are restrictions how the funds could be spent but one thing for sure, your children own the moolah under their names legally.
4. Otherwise, parents can make do with guardian-child accounts offered by some institutions. Here are some of them and they are not ordered in any particular sequence.
5. POEMS has a Junior Share Builders Plan where you can open a joint account with your child. You can use the account to invest in stocks and ETFs on a monthly basis starting from S$100.
6. OCBC also offers a similar product under their Blue Chip Investment Plan and allow joint accounts with with a minor below 18 years old.
7. MoneyOwl accepts joint investment account between a primary and secondary (minor below 18) holders. You can invest in prescribed portfolios constructed by Dimensional funds rather than ETFs or stocks.
8. The last way is to officially name your child as a beneficiary while you own the investment account. This can be done via a trust or buying insurance products. Some institutions like FSMOne allows you to name a beneficiary for an investment account.
9. As you can see, parents still need to administratively jump through hoops to invest for their children today. And the solutions are meeting you half-way.
10. There have been some improvements though. For example, the minimum age has been reduced from 21 to 18 years old in 2009. But more could be done to allow children to own their investments (with safeguards) and to be more engaged in the process, thereby enabling financial literacy to start at home.
