There's been a couple of bloggers out there who have posted on what they would do to help their parents invest their money.
I've been thinking over the past few weeks on what I should do with the angpao savings my son received from families and friends during his birth and the 1st month baby shower. The savings amounted to around S$6,200 for now and the objective is to pay for his college and university school fees when he matures later.
There are a couple of choice which has been lingering on my mind. The one thing certain is he has a longer time horizon (around 20 years) and the argument is he can stomach more risky investment. Still, I am not sure if that is going to be the best option.
Option 1
I was planning to open up a junior savings account for him. My idea was to put in these sum of money on the savings account and we have the flexibility to take out as and when it might be required (sort of acting as a secondary emergency fund). However, it appears that this move may be unwise given the rate of inflation that would eat up the sum of money in 20 years time.
+ : More Flexibility, Act as a secondary emergency fund
- : Inflation
Option 2
The second option is involving endowment plan under an insurance plan. This is a rather good option which gives me the rate of return required and also higher than the normal savings account. However, I am not sure if this is the best option as first of all it doesn't give me the flexibility to either stop or withdraw the premium and secondly, I might already have something like this plan in the form of my life insurance plan (where after 15 years and I no longer want to be covered for life, I can withdraw the money and breakeven, SHOULD I really need the money)
+ : Returns are better than fd and safe from recession
- : Less flexibility
Option 3
The third option is to invest in stocks which will compound over time after 20 years. Stocks is a risky instrument in general and hence I might be looking more into defensive stocks that yield good returns over the past couple of years, proven. Stocks such as ST Engineering or Singtel are what I have in my mind.
+ : Higher returns
- : May be subject to recessions and volatility
Whay do you think? Are there any other options which might be suitable?
