Kick-start my baby’s Ordinary Account with her Child Development Account

At the 2016 Budget announcement, all Singaporean children born from 24 March 2016 onwards will receive an initial Baby Bonus First Step Grant of $3,000 in their Child Development Account (CDA). I shall not dwell too much in the usage of the CDA.

In addition, the government did a Dollar-For-Dollar Matching for up to $3,000 for the first child. I did a $3,000 top-up and with that, my child started off with $9,000 as an early head-start.

Yielding at current interest rate of 2%, it is a good deal considering its flexibility of usage. Do you know that as your child goes through different stages of life, the monies also moves from the CDA to PSEA to CPF-OA over the course of 30 years?

Account	Age	Annual interest
Child Development Account (CDA)	0 – 12	2%
Post-Secondary Education Account (PSEA)	13 – 30	2.5%
Ordinary Account (CPF-OA)	> 30	2.5%

Thus far, I have been using cash for medical-related expenses or childcare fees and I intend to do so as much as I can. For a parent who does not use a single dollar from the CDA and PSEA, the initial value of $9,000 would have grown to $17,802 upon the transfer over to CPF-OA at age 31.

This will be a nice gift for her whether she uses it as part of home financing, CPFIS-OA investment or even part of her retirement plans if she considers maximising her SA.