The parent is allowed to contribute up to $6,000 in a child development account (ie baby bonus). The governemnt matches with $6,000.
The total of $12,000 has to be invested with POSB which pays interest at 0.275% a year. Unused money in the account will be transferred to edusave when the child enters primary school. The investment in POSB is for 6 years.
Capital sum $12,000
Interest for 6 years at 0.275% p.a $199
Interest for 6 years at 2.5% p.a $1,916 (10 times more)!
Interest for 6 years at 5.5% p.a. $4,546 (not guaranteed, 22 times more!)
The difference is still sizeable.
We will find a way to convince the government to allow the money to be invested in our balanced fund to earn a higher return.
Bingo. I will certainly be among your first few customer to sign-up if NTUC Income can convince the government to allow the money in the CDA to be invested through your investment funds.
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