Saturday, June 16, 2018

Radical ideas on parenting.




This came about after I became triggered after reading Teo You Yenn's book when she created a false dichotomy on the various approaches to parenting found in Singapore.

For the folks that she did a lot of ethnographic research on, she labelled their approach towards children as seeing them as a "blessing". Children are almost like a gift from the Almighty. You take the children as they are and then do your best in raising them. Children for these folks are happy accidents.

Prof Teo had no mercy for the folks on the other side of the rich-poor divide. The label she applied to parents like myself is that we view our children as "projects". This is because we take a lot of pains to plan our families and put our kids through the education system.

By using two carefully chosen labels, Prof Teo was able to realign everyone's perspective on Singaporean parents. The good has become evil, and evil has become good.

If you have a kid out of wedlock, fail to get them into the best educational institutions and create the next generation of possibly very needy welfare recipients, you are forgiven because children are a "blessing" and society should ideally love every Singaporean unconditionally. If, like me, you take pains to ensure that your kids have a fully topped up Child Development account, we're suddenly soulless cogs in the machine who raise children our kids the same way a Project Manager meets a series of milestones. This is even when we're working hard so that our kids might become responsible tax payers in the future.

Another words, we're the 70% Sinkies responsible for everything horrible about Singaporean society today.

There are a lot of parenting gurus these days on social media. But to me, the only way to vindicate your ideas is that your own kids turn out well. And the truth is, there are no guarantees when it comes to our own kids. Kids are very creative in finding all sorts of ways to become a disappointment and disgrace to their families, so it's best to be humble, do your best but be prepared for the worst.

For today, I'm just going to offer alternatives from what you read from parenting gurus. I'm not trying to burst their bubble, because their kids may well win the Academic Hunger Games of Singapore. I just think that perhaps we can inject a lot more skepticism when we read what most of consider "common sense" when it common sense.

A key idea I take issue with is the idea that we should not give our children too much because it would sap their willingness to put in the hard work for their future and become overly entitled as Singapore citizens.

On careful inspection, it really does seem like common sense. We need to let children come to their own when they find work in the workplace. But I believe that I have valid reasons to be skeptical about this advice. I think that the folks spreading this idea, are the folks, who themselves, have received very much from their parents, so they might not be aware aware about how a little capital can go a long way in life.

Here are some of points that are worthy of consideration :

a) Children from richer families are better at delaying gratification.

This is possibly the most important discovery in social science of late. The orthodoxy is that children who can delay gratification seem to do very well in their adult lives. Buts someone tried to replicate the Stanford Marshmellow test lately,  and they found out in a bigger experiment that the kids who passed the marshmellow test came from richer families that was able to give them the stability and predictabiilty in their daily lives in such a way that they can delay something good to achieve something better in life.

b) Successful entrepreneurs tend to be rich kids with safety nets.

Another harsh truth is that the successful entrepreneurs are rich kids with safety nets. This actually makes sense if you are in the FIRE movement. The biggest risks I took throwing my IT career away to study Law in SMU simply cannot be performed by a family man who needs a day job. I need financial independence to be my enabler.

It's the same principle when you ask a young IT professional to forego a banking IT job to get into a startup. He'll do it if it is safe, otherwise, he needs an assurance if he were to survive a collapse of his startup. Coming from a rich family can provide that insurance from startup failure.

c) Investing requires experience and tuition fees.

This third point I have to share is that investing requires time. You need to have the courage to open a trading account, get a few trades out, lose a little money, but eventually figure out how to get a diversified dividend stream into your bank account.

It took me 14 years and over 7 digit portfolio to gain the courage to play with leverage. I have yet to even figure how to short a CFD.

Similarly, young investors might not be able to learn about all these tricks the Mr Market can offer to teach without a larger starting capital. Getting them to earn their way there can potentially work, but a larger starting capital can get them more comfortable to the idea of risk at a much earlier stage in life.

d) We may overestimate the job prospects for our children's generation.

It's very easy to say that Millenial's just need to be as hardworking and vicious as Gen X, but they are not coming into a job market with plenty of MNC and comfortable public sector jobs. Millenials may spend years holding jobs in the gig economy and face years of lumpy salary payments.

It's easy for me to say that kids should just build their passive income the same way I did, but I relied on decades of MNC employment to make it happen. Will these MNCs even be around in 25 years ?

P&G and HP are ghosts of their former selves.

In fact, I think believe the opposite compared to those "parenting gurus". I admit that given that my own kids are a work in progress, I can be wrong about parenting. But I believe that as it stands, what I am proposing is not inferior to what other parents are touting.

Rather than to just leave our kids to slug it out, I believe the following alternatives may work but might be controvesial:

a) Tuition money can invested into a financial portfolio if the gains in human capital are low compared to gains in financial capital.

For this point, you need to understand your kid's character.

Not all kids are academically brilliant. $1,500 invested in a top flight tuition every month may send some kids to Raffles Institution or GEP, but other kids with the same investment can still end up in Changkat Changi Secondary School.

Not all kids respond well to expensive tuition and hot-housing.

However, the opportunity cost of paying for tuition is investing in the financial markets. A good backtested portfolio can reasonably return 9% every year. If your kid cannot graduate from a good local university, he might do better with a portfolio that generates passive income along with a polytechnic diploma instead.

b) Give your kids an early inheritance while you are still alive to supervise them.

There are too many stories of useless adults in their 30s waiting for their parents to die so that they can become financially independent. The common sense solution is not to give these useless bastards anything.

But I think the solution may the opposite of that approach

While a parent is alive, why not give your children small amounts of capital so that they can learn how to handle larger sums of money, which really requires a different mindset from wage slavery anyway.

Personally, I would give around $50,000 on graduation day and negotiate a cash award for every level of CFA my kids are able to conquer. This would get them to become more confident with handling a market portfolio and given them an incentive to take on one of the hardest exams the world has to offer.

Imagine other Millenials struggling with their study loans but your kids are figuring out how diversified portfolio of REITs can pay off some of their daily expenses so they know that alternatives to earned employment exists. That's a genuine competitive advantage.

Anyway, do share your feedback on these controversial ideas I'm pretty open to criticism because I have two decades to refine these ideas while my own children grow up.







2 comments:

SGDividends said...

I wonder about the fairness of the marshmallow test because kids from richer families may have too much marshmallows already. So maybe it's not delayed gratification but I'm tired of it

Christopher Ng Wai Chung said...

I have yet to read the original report. I am inclined to believe that this second experiment administers snacks other than marshmallows.

Quite sure such an extensive experiment would cover that possibility.