How busy mothers can start investing: ‘I put every ang pow into investments for my kids’

What do you do with your child’s ang pow (red packet) haul? Put it in the bank? Let them spend it?
For Samantha Horton, who is the chief operating officer of investment platform Syfe, every cash gift her kids receive for Chinese New Year, birthdays and Christmas goes straight into a diversified investment portfolio with 1,500 stocks across global markets.
Her two children, aged four and two, each have their own investment accounts. “If they get S$50 from an ang pow, I will transfer it in. They’re not going to touch it for the next 20 years so the money compounds over time,” she said.
One of the first gifts she hopes to give her own children is the longest investment horizon possible.
“Time in the market beats timing the market. In the long run, markets go up. So essentially, the earlier you start, the better,” she said.
STARTING EARLY
Many renowned investors, including Warren Buffet, have shared the same advice – to start investing early.
In fact, waiting too long was one of the costliest financial mistakes that Horton made. Though she has been a professional investor for nearly two decades, the 39-year-old only started investing her own money three years ago.
“I used to work at a large hedge fund so my payouts at the end of the year and job security were so linked to the markets.
“Because I was already so leveraged and had so much risk on a professional level, I did not invest my personal savings. I put a lot of my own money in a bank, basically earning nothing,” she said.
“If I had started earlier, my money would have compounded, and I would have been in a better place than I am now,” reflected Horton who started investing her own money after she left the hedge fund.
Since she became a mother, she has invested her children’s money – even before they could count.
In addition to investing their cash gifts, she deposits money into their investment account monthly for college fees and other needs down the road.
“[Children] are very expensive. And you know that the expenses for them are just going to grow over time. You have to be prepared for that.
“Money does not buy you happiness, but it buys you options. I want my kids to have as many options as possible, and a big part of that is the opportunity to pursue higher education of their choice,” said the Singapore permanent resident.
However, Horton noted that women generally invest less than men, an observation reflected in global studies. She believes one reason for this is the lack of time. 
“A working woman who is also a primary caregiver to her children has significantly less time. Investing can be way down on their to-do list,” she said.
This comes with an opportunity cost. “If we look around the world, inflation is increasing. Things continue to get more expensive and the real value of your money is going down,” she said.
“For many people, it’s unlikely for wages and income to keep up with [inflation]. One way to guard yourself against inflation is by investing in assets which will generate returns that would beat inflation,” she said.
“If you do nothing with your money, S$10,000 stays S$10,000 18 years later. If you put it into savings and timed deposits, you could potentially turn that into S$12,800, based on historical data. A 28 per cent return may sound decent at face value. But the real value of that money would actually be 50 per cent less because of inflation over 18 years.
“If you had invested that money in a diversified portfolio, based on the annual rates of returns for the global stock markets and US stock markets, the return is around eight per cent a year. That S$10,000 would have turned into around S$40,000. You would have been safely better off than inflation,” she explained.
HOW WOMEN CAN START INVESTING
These are not new concepts to many people. “That’s something I find to be true even with my friends. They get it. They understand inflation, interest rates and the concept of investing. But people often don’t know how to act upon it,” she said. Financial jargon adds to the sense of complexity.
“It then goes in that too-difficult bucket, and that’s where the inertia sets in.”
To break the inertia, Horton suggested starting by putting small amounts in a diversified portfolio with good asset allocation, and leaving it there for five to 10 years and beyond.
Before you do this, set aside around three to six months’ worth of expenses as emergency cash so you are less likely to draw from your investment during a downturn.
“Don’t put all your eggs in a few stocks. Investing in single stocks could be a lot more rewarding, but it can also be a lot riskier,” Horton added.
This advice also applies to following investment trends, such as AI and cryptocurrency, Horton added.
“Sometimes that could be the first thing that people start investing in,” she said.
“People often get really enamored with short term gains. Look how much money I’ve made,’ you might say. But that’s not always the wisest move in investing,” she said.
“There’s a lot of risk in following some of these very concentrated bets – trends that could also go down a lot. Though it is less sexy to invest in a long-term, diversified portfolio, you should really take a step back and think about it over the long run. You are likely going to be thanking yourself in five, 10 and 20 years,” she said.
One rule of thumb if you are a relatively cautious investor is to put the portion of money you are willing to lose in a satellite portfolio comprising riskier investments such as single stock that you are passionate about, or even cryptocurrency, she added.
“The percentage [to allocate] is quite an individual decision. Generally, for a lot of people, that’s somewhere around 30 per cent [of your total investment sum] – enough to generate significant returns, but if that portfolio is down 30 per cent, you would not be so affected,” she explained.
“For equities, ETFs tend to be the lowest cost and the most accessible way to invest,” she noted. ETF stands for Exchange-Traded Funds, which hold a diversified portfolio of assets and are traded on the stock exchange like individual stocks.
Another option is to invest in ready-made diversified portfolios through platforms like Syfe where professionals manage your portfolio for you, said Horton.
One of the biggest barriers to investing is the fear of losing money, Horton said.
“Many people will start out, and in the first month, they might see that the market is down or their portfolio is down, and get scared,” she said.
“That’s where education is important. Markets go up in the long run. But you have to be able to ride that volatility. You have to have that reassurance that you don’t need the money in five years, in 10 years. In the long run, it’s going to earn you returns,” she said.
This is something she hopes to teach her kids when they are a little older.
“My kids are a little bit young right now. But soon, they’ll be able to see the power of investing by looking at their own portfolios. Over five to 10 years, they will see how much it has grown,” she said.
“Compound interest and returns is an important lesson to teach kids.
“If you make 10 per cent on $1, that $1 turns into $1.10. Now you’re making 10 per cent of $1.10 instead of $1. Over a long period of time, that really makes a big difference. You can turn $1 into multiple dollars,” she explained.
“I may even set up a system where my kids can take out some of their positive returns generated from their portfolio to get themselves something that they want every birthday,” she added.
“It relates to this whole idea around delayed gratification, and the power of savings and investing. If you think about the future, this will pay a lot more dividends than getting all the gratification upfront,” she said.
CNA Women is a section on CNA Lifestyle that seeks to inform, empower and inspire the modern woman. If you have women-related news, issues and ideas to share with us, email CNAWomen [at] mediacorp.com.sg.