Get a better return for your baby bonus?

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.