As a mum of three, I’m constantly blindsided by how fast the outgrowing happens. Last year’s shoes are tight, last month’s hobbies are boring, and the infant years already feel like a blur.
We spend so much energy trying to buy time by multitasking or paying for convenience just to save five minutes. But there’s one type of time we can’t buy back: the decades our children have ahead of them.
While we fret over the right school or the next growth spurt, a ‘secret weapon’ is sitting right in front of us. It’s their age. In the world of investing, age isn’t just a number. It is the ultimate head start.
The Cost of Waiting
Many parents already know they should start investing for their children but aren’t always sure how to start investing for their child in a practical way.
So it gets pushed aside. But in investing, waiting has a cost.
Not in the form of a fee you can see, but in what your money could have become if it had more time to grow.
I think of this as the Time Tax.
Why Time Matters
Let’s look at a simple example, comparing starting at birth versus age 12, assuming a 6% annual return, and that the later investor contributes more each month to try and make up for lost time.
| Starting Age | Monthly Contribution | Total Out-of-Pocket | Total Returns 6% (Profit) | Value at Age 25 |
| At Birth | $50 | $15,000 | $19,650 | $34,650 |
| Age 12 | $100 | $15,600 | $7,952 | $23,552 |
At first glance, it looks like starting later still “wins”.
After all, you invest more and end up with more.
But look closer at what it took to get there.
The later investor had to contribute more out of pocket, but still ended up with a smaller profit.
That’s the Time Tax.
Starting earlier doesn’t just grow your money. It reduces how hard your money needs to work later.
So the real question is: Are you giving your child’s investments time, or asking your future self to work harder instead?
Compounding: The Engine Behind It All
Compounding is probably the most talked-about concept in finance, but let’s be honest: in the beginning, it’s incredibly boring.
It’s a lot like watching your children grow. You don’t actually see them getting taller every day. You only realise it happened when you’re suddenly buying new school uniforms for the second time in a year because nothing fits.
In your portfolio, compounding is that same quiet, invisible work. It doesn’t feel like progress when you’re in the thick of it. It’s just dividends trickling in while you’re busy with work or the school run, and then those dividends being put back to work.
In the early years, the needle barely moves. It can be tempting to think it’s not working. But the magic isn’t in the engine; it’s in how long you leave the engine running.
The truth is, most people don’t fail at investing because they pick the wrong stock or miss a hot tip. They fail because they get bored or impatient and stop before things actually get interesting.
The earlier you start, the less you have to rely on being a “genius” investor, and the more you can just let time do the heavy lifting for you.
A Simple Approach That Works
When it comes to investing for your children, complexity is not the goal.
Instead, focus on a few simple principles.
Consistency over intensity
It’s not about waiting for a bonus or a perfect entry point. It’s about showing up regularly and investing consistently.
Time in the market over timing the market
Markets will move. Headlines will change. But keep your strategy steady.
Let compounding do the heavy lifting
Reinvesting returns and staying invested over time matters more than trying to optimise every decision.
In practical terms, this could look like:
- Setting aside a fixed monthly amount (even a small one)
- Investing into a diversified portfolio of quality businesses or ETFs
- Reinvesting dividends instead of withdrawing them
For example, some parents may start with established Singapore companies such as DBS (SGX: D05), OCBC (SGX: O39), and UOB (SGX: U11), which have a track record of paying dividends.
Others may include REITs like CapitaLand Integrated Commercial Trust (SGX: C38U) or Mapletree Industrial Trust (SGX: ME8U) for regular income that can be reinvested over time.
For long-term growth, global companies such as Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), or Visa (NYSE: V) can complement the portfolio.
For a simpler approach, broad-based ETFs like the Vanguard S&P 500 ETF (NYSEARCA: VOO) or the STI ETF (SGX: ES3) provide diversification across many companies.
Whichever option you choose, the principle remains the same: start early and stay consistent.
Get Smart: More Than Just Money
This isn’t just about building a portfolio.
It’s about what that portfolio represents in the future.
And that is options, flexibility, and a head start.
It could mean less pressure when they enter adulthood. More freedom in choosing what they want to study or pursue. Or simply having a stronger financial foundation.
For parents in Singapore, where the cost of education and living continues to rise, starting early can make a meaningful difference over time.
Because when you give money time to grow, you’re not just building wealth.
You’re building choices.
We’ve found 5 SGX-listed dividend stocks with strong track records in turbulent markets. If you want consistency in an uncertain world, start here.
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Disclosure: Joanna Sng owns shares of Apple, CICT, DBS, Microsoft, MIT, OCBC, UOB, STI ETF, Visa and VOO.
