Investing in your kids' future with their Chinese New Year Hong Baos 🧧
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Investing in your kids' future with their Chinese New Year Hong Baos 🧧

May 2022
Feb 2021

Start inculcating the right financial values from young

Key takeaways:

  • Properly investing my hong bao money from young could have multiplied its value by 3.5x today
  • Teaching our children about passive money is important, so they take ownership and are responsible about their money, and so they can build positive habits towards a strong financial foundation
  • Our children will thank us for investing their hong bao money on their behalf, and yielding long-term compounding returns during their formative years

Before the age of 15, I had a money diary that my mom would keep in her safe, of the money I received during Chinese New Year (CNY). At the end of every long day of house visits, I would run to her room and get my money diary, stack bills and coins in piles, ready to count and put in my ledger.

At some point, this ledger was finally replaced with a bank account, but it had not grown passively over almost two decades of accumulation - in fact, it didn't even grow at bank interest rates. I remember setting up my first bank account and immediately being pushed some "hot" funds of that period. Not knowing any better, I paid a sales charge and bought some products from the banker at our local branch to put my capital in the markets.

Years went by - I changed the funds a few times, but have not really used this bank account since - and it has not grown much at all, unsurprisingly.

Reflecting on this experience, I identified two points of failure:

  • To my loving parents (who may chance upon this article) the act of saving was taught, but not of the simple principles of inflation, interest, and compounding wealth
  • To me, I had the opportunity to reverse the fate of this money once I learnt how to invest, but turned a blind eye in my frustration and did not give it the care and attention it needed to be put on the right course

Looking back and doing some quick math, if my parents had helped me invest on my behalf in something like the MSCI All Country World Index (MSCI ACWI), it would have grown 3.5x (+253% return) since my first CNY in 1990.

Let's attach some numbers to this example to make it more tangible:

  • Assuming I received S$500 per CNY from generous relatives and friends (totaling S$16,000 over the years including this past week's CNY)
  • In February each year, my parents diligently invested this money in an MSCI ACWI tracker fund and never touched it
  • Currently, I would have over S$56,545 in my investment goal, or a +253% simple return on my investment amount of S$16,000 over the years
  • In this time period, from 1990 to end-Jan 2021, the MSCI ACWI grew by over +600%
Investing in your kids' future with their Chinese New Year Hong Baos

Fast forward to today - I now have two kids of my own.

My older child is four. She counted her money next to our bed this morning and wrote down the total on a post-it. She handed it over with the cash and gave it to me for safe keeping.

We invest so much time, money, tears, joy, and love in our children. We should really help guide them through some life's more uncomfortable realities, like money. It got me seriously thinking about how I can empower her to be better with money so she can pursue her life ambitions in her control.

When she is of age, I will teach her some foundational principles about passive money:

But for now, as she has entrusted me with her money, I will set up an investment goal (screenshots of my steps below) for her hong baos so her money can get to work, and these generous gifts from relatives and friends are utilised to empower a better future.

1. Log in to your Endowus account
(Or create your new Endowus account)

Endowus home page

2. Click "Add goal" on your menu. You can create as many goals as you like with Endowus.

Endowus side bar. to click on add goal

3. As this is for longer-term money, select "General Investing" (General Wealth Accumulation) and continue

investment goals selection page

4. As hong bao money is cash, select "Cash savings"

funding source selection page

5. As this is a longer-term investment, input the amount of hong bao money received as the initial investment amount (I put "S$500"), and select an appropriate risk tolerance for this goal.

goal selection page

6. Name the goal. My daughter's name is Emilia, I've named it "Emilia's hong bao!"

goal projection setting page

7. Review your investment plan, goal projection, underlying funds, fees, and historical performance and confirm with SMS

8. You will be sent funding instructions via email. Once your investment is funded, that hong bao money will be invested in your new goal, and you will be investing in and for your kids!

Get a head start on financial literacy & general investing by watching our Investing 101 with Endowus 4-part series here.


This article is for information purposes only and should not be considered as an offer, solicitation or advice for the purchase or sale of any investment products. It is recommended that you seek financial advice as to the suitability of any investment. Whilst Pte. Ltd. (“Endowus”) has tried to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies or typographical errors.

Any opinion or estimate above is made on a general basis and none of Endowus, nor any of its affiliates, representatives or agents have given any consideration to nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Opinions expressed herein are subject to change without notice.  

Investment involves risk. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. Past performance is not an indicator nor a guarantee of future performance.

Please note that the above information does not purport to be all-inclusive or to contain all the information that you may need in order to make an informed decision. The information contained herein is not intended, and should not be construed, as legal, tax, regulatory, accounting or financial advice.

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