Get Rich Slow – Investing For Kids (2020 Update: COL Financial Review)

A couple of years ago, I previously wrote a post about how I invested our kids’ money (it was only Mati and Hannah then), and most of it holds true.

But lately after reading more about investments and computing how much it be for all of our kids to attend university locally, PLUS give them the option of taking further studies abroad, the totals for three kids are white-hair inducing.

The Main Plan: Stock Market

The kids still have some cash in the bank, but I’ve dedicated a greater portion of their savings to the stock market.

Historically, stocks are still the best-performing and most accessible form of investment. Time deposit rates are so low that it’s almost laughable, and online banking platforms like CIMB who offer higher savings rates (4% per year) only allow accounts to be opened for clients 18 years and above.

But also note: Stocks also are considered high-risk, so this is only if: 

1) you are planning to invest for the long term and

2) if you have already saved a separate emergency fund and will be using your extra cash to invest.

Fresh Start

I originally had set up an auto-debit mutual fund with Sunlife for Mati a few years ago, but Hannah’s application just stalled for months and I found their enrollment process to tedious to go back and forth on forms and signatures.

Eventually I also stopped funding the Mati’s mutual fund account since 1) the mutual fund wasn’t what I hoped and 2) I was in search for a more convenient option for ALL three kids.

When? Yesterday. Now.

When the pandemic hit, I knew it was an opportunity to update my kids’ finances and invest. Today, the YTD (year-to-date) return for PSE index fund is around -17%. Meaning if you bought the index fund at the start of the year, your portfolio would have a 17% lower value today.

You can invest in individual stocks or buy a mutual fund (basket of stocks). Either way, be sure to do your research on reputable companies and fund managers (do NOT invest in penny stocks if you’re investing on the long term).

Easiest Way So Far: COL Financial

This is NOT a sponsored post by the way, but I found COL Financial as the easiest way to open both a stock market account and a mutual fund account during the pandemic. They have an Easy Invest Program (EIP), that automatically lets you buy stocks or mutual funds on a weekly, monthly or

Everything is done online, and I had an account up for all three kids within 24 hours.

Some tips when enrolling:

1. Read the COL website’s investment primer to learn more and gain confidence in investing in the stock market.
2. Have your ID, kids’ ID’s and your TIN ready.
3. If you have multiple kids, consider opening an account for each one. The account would bear your name, then ITF (in trust for) you’re child’s name. When they are school-aged you can show them their account and give them an introduction to personal finance management. I think this a great real-life lesson that is missing in schools today. When the kids turn 18 or when they are ready, you can turn over the account for them to manage.
4. Fund child’s account with a minimum P5,000, but preferably more so that you have more wiggle room to invest and don’t want to keep funding everytime.
5. Choose between weekly, monthly, semi-annual or annual investments. Honestly, I think weekly or monthly would be the more practical choices as semi-annual and annual investments don’t allow you to get the best prices  (peso cost average)
6. Once you have an account, take time to learn the COL dashboard. It’s user-friendly but may take some time to get used to.

What stocks to buy?

I bought both equity funds (XPEIF and FMETF), because I am willing to take the risk and go for the long run. COL Financial has Easy Investment Plans for specific blue chip stocks if you want to focus primarily on certain companies.

At A Loss? Kapit Lang.

It’s sometimes tempting to look at your stock portfolio everyday, especially when the market is up. Or reverse, get paranoid and anxious when the market goes down. But don’t na hehe. That’s the main reason why there is an auto-debit function and you are investing in the long run.

You are not a tsupitero or day trader, but a long-term investor. When you are nearing your exit (10-15 years from now?) then you can start selling off slowly and enjoy the profits you have accumulated over the years.