How Much Do We Take to Make a Baby a Millionaire?
To be specific, to make a baby millionaires, $ 64,350 must be deposited into a baby’s CPF Special Account (SA) at birth.
Many Singaporean parents are unaware that every Singaporean baby has a CPF account created for them at birth. The baby’s CPF account will be set up once the government credits the baby bonus to their baby bonus account.
This also applies to permanent residents (PR) and their children. The CPF Board will set up a CPF account for the children of PRs once their parents have funded their CPF account.
As a parent, you should use this privilege to recharge your baby’s CPF SA. Regardless of age, the first $ 60,000 in your child’s CPF SA would make a whopping 5 percent return!
If you take in the power of compounding and leave the SA balance untouched, that $ 64,350 will turn into an astronomical $ 1 million when your child retires 65 years later.
An illustration of a baby’s CPF SA growth path:
However, the likelihood that parents or grandparents can make a one-time contribution of $ 64,350 at the time of the child’s birth is quite small. Instead, it may make more sense to accept a gradual annual recharge for the child.
Here are some combinations of starting amount and annual top-ups to make a kid a millionaire:
The earlier we charge the child’s SA and the larger the quantum, the fewer years it will take to make them millionaires in retirement at 65.
This article was first published in MONEY FM 89.3.
