Start inculcating the right financial values from young

Key takeaways:

  • Properly investing my hong bao  (🧧 红包 🧧)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%
Observed 3.5X growth if you had invested your hong bao monies since 1990

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 them 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 (🧧 红包 🧧)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)

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

3. As this is for longer-term money, select “General Wealth Accumulation” and continue

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

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.

6. Name the goal. My daughter’s name is Emilia, I’ve named it “Emilia’s hong bao!”

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.