Join me in the Baby F.I.R.E. movement, where for babies First In Relax Easy. I am illustrating from my own personal experience (for new parents with their first child) on how your baby can F.I.R.E. up her life early, right from the day she is born. Figures used may be different for subsequent children, but you get my point.
If you just want to read a summary, scroll all the way to the bottom to read what I had done or plan to do.
For children born on or after 24 March 2016, the Baby Bonus Scheme helps to lighten the financial costs of raising children. Your child can join the scheme as early as 2 months before estimated delivery date, by submitting the online form.
Cash gift
The cash gifts is a series of payments given by the government direct to the parents’ bank account, 7 – 10 working days of your child’s birth registration, or after completing the online form for the Baby Bonus Scheme, whichever is later.
| Child | Cash Gift | Payment Schedule |
| 1st & 2nd | $8,000 | 1st: $3,000 [within 10 working days] 2nd: $1,500 [6 months] 3rd: $1,500 [12 months] 4th: $1,000 [15 months] 5th: $1,000 [18 months] |
| 3rd & higher | $10,000 | 1st: $4,000 [within 10 working days] 2nd: $2,000 [6 months] 3rd: $2,000 [12 months] 4th: $1,000 [15 months] 5th: $1,000 [18 months] |
The first payment tranche for my child ($3,000) came in within 10 working days. This sum comes in handy as I used it in its entirety for the CDA account matching.
Child Development Account (CDA) First Step Grant
This is an initial balance of $3,000 (which comes from the Government’s existing contribution caps) given without parents having to save in the CDA first. Parents need not make a trip to the bank to open a CDA with DBS, OCBC or UOB.
CDA will be opened within 3 – 5 working days of their birth registration, or after completing the online form for the Baby Bonus Scheme, whichever is later.
CDA Account matching
The Government will match your contributions in the CDA within 2 weeks. Babies born from 24 Mar 2016 will receive up to $3,000 of CDA First Step grant.
| Child | Maximum matching amount |
| 1st & 2nd | $3,000 |
| 3rd & 4th | $9,000 |
| 5th & higher | $15,000 |
With the first tranche payment of $3,000 from the cash gift that I injected into my child’s CDA, she ended off her first month in this world with $9,000 in her CDA account.
Health insurance
At the same time from my child’s birth, I was scouting around for her health insurance coverage. The most important health cover is her Hospitalisation plan. Babies can get sick often as the essential immune cells that help fight infections do not develop until they get much older.
Parents may look at Personal Accident a little later, say when your child goes into infantcare or childcare where minor accidents are not uncommon. Early Critical Illness (ECI) coverage is a good to have and not a must-have at this stage, especially if you are currently tied on a budget. At the same time, my other half was focused on her education 21 years from now and decided to gift an endowment plan.
Without any dependents or liabilities of their own, babies do not require death benefits coverage, yet. However, parents may prefer purchasing Whole Life policies as a gift to their child, when they grow up.
Personally, my child was covered with her Hospitalisation plan, Personal Accident plan, ECI plan and Endowment plan before she turned 1 month of age.
Child Savings account (Coin deposit account)
Along with the CDA account, I would propose at the same time, the opening of a child savings account. While the 2nd to 5th tranche payments from the cash gift will take time to arrive, me opening this child savings account was in preparation of receiving the above (I did a transfer to her savings account) and for other events like her birthday, Chinese New Year red packet monies as well as all the spare change in our house.
Do note that with a Child Savings account, coin deposits for her is fee-free for a certain number of coins on a monthly basis. This is greatly useful for parents who keep alot of spare change lying around in the house.
By the end of her 18-months, my child would have at least $5,000 in her savings account. However, the monies in her savings account do not sit still earning the pittance bank interest.
Joint-investment with Daddy’s trading account
I recognised that there was a need to start investment early from a young age for capital accumulation. While it was too early to include her name as a joint brokerage account, I had created a separate brokerage account where stocks and shares are specially traded using only her funds.
Regular Savings Plan (RSP) account
On the other hand, a RSP account which is a joint minor-adult could be created. I am a strong advocate that your child should start investing early in life. Using Philips Capital POEMS trading platform, this RSP account will be handed over to her for financial management when she turns 18.
CPF Account
All Singapore Citizen newborns born on or after 1 January 2015 qualify for the enhanced $4,000 MediSave Grant for Newborns. For those born earlier, a CPF account will be automatically created when a first top-up or CPF contribution is received.
Do you know that there is a way to link Parents-to-Child CPF account to view their statements online? By completing PART 1 to 3 of the attached application form (Form MAC 4 below) and submitting it together with a copy of your child birth certificate back to the CPF Board, either by walk-in to their Service Centres or address within the form.
You will be notified when your child’s statement is ready for online viewing.
I carry out monthly cash top-ups to my child’s Special Account (SA). With interest rates of 4% (5% on the first $60,000), the amount including compounded interest do add up to a bit after a long period of time.
Going Forward
Edusave
Every Singapore Citizen will automatically have an Edusave account created for them from age 7 – 16. The interest rate is 2.5% p.a. similar to the CPF OA. They will receive annual Edusave contributions in their account for educational use. Here’s how much your child will receive this year (2019):
- Primary school students: $230
- Secondary school students: $290
The above annual Edusave contributions are subject to changes.
Post-Secondary Education Account (PSEA)
Every Singapore Citizen will automatically have a PSEA account created for them from age 13 – 30, for post-secondary education use. While there is no contribution from the government, the interest rate is 2.5% p.a. similar to the CPF OA.
Balance from CDA will be transferred to PSEA in the year your child turns 13 years of age and serve to pay for your child’s education needs after secondary school. CDA will be closed.
Balance from Edusave will be transferred to PSEA in the year your child turns 17 years of age or is no longer studying in a MOE-funded school, whichever happens later. Edusave will be closed.
At the age of 31, balance from PSEA will be transferred to CPF Ordinary Account (OA) and the PSEA closed.
As much as possible, I shall not use her CDA, Edusave and PSEA monies but allow them to grow. By the time the monies are transferred to her CPF OA at age 31, this will end up to quite a sizable amount.
SUMMARY IN SHORT
I registered my child for the Baby Bonus Scheme 2 months before she was born.
Using the first tranche Cash Gift payment of $3,000, I contributed dollar-for-dollar matching by the Government and ended off with $9,000 in her CDA in the first month.
I got my child covered for Hospitalisation, Personal Accident, Early Critical Illness and Endowment plan before she turned one month of age.
I opened a Child Savings account whereby the subsequent tranche payments from the Cash Gift are injected besides monies received from her birthdays, Chinese New Year red packet monies and coins deposit from the spare change in the house.
The money does not stay stagnant in her savings account earning the pittance interest but injected into lump sum investments (via daddy’s trading account specially for her) and also dollar cost averaging via her Regular Savings Plan (RSP).
Her CPF account started off with $4,000 in her MediSave Account (MA). All medical-related expenses were spent from my own MA so that her MA can grow. I do cash top-ups to her Special Account (SA) monthly, whereby the amount including compounded interest will add up to quite a bit after a long period of time.
As much as possible, I shall not use her CDA, Edusave and PSEA monies but allow them to grow. By the time the monies are transferred to her CPF OA at age 31, this will end up to quite a sizable amount.
Conclusion
With the above FIRE path planned out, Baby F.I.R.E movement will have a good start in life for the future.
Goal: 1M30
Theory of Constraints 
One thought on “Baby FIRE movement”