I was born in 1983. That same year, Prime Minister Lee Kuan Yew said in his annual National Day Rally speech
“If we continue to reproduce ourselves in this lopsided way, we will be unable to maintain our present standards. Standards of competence will decline. For how can we avoid lowering performance when, for every two graduates… in 25 years’ time, there will be one graduate, and for every two uneducated workers, there will be three?”
Both my parents are not graduates. I must have felt shitty if I could understand what he had said at that time.
In 2011, after almost 30 years, he has not changed his views. In the book, Hard Truths, he was quoted as saying
“When the graduate man does not want to marry a graduate woman, I tell him, he’s a fool, stupid. You marry a non-graduate, you’re going to have problems, some children bright, some not bright. You’ll be tearing your hair out.”
I have great respect for Lee Kuan Yew. He has really made an impossible Singapore possible. His influences run deep even till today. His insistence that only Elites are capable of running the country is unquestionably preserved.
You Should Be An Elite.
The Singapore message is a unique one: You should be an Elite.
In political and sociological theory, the Elites are a small group of powerful people who hold a disproportionate amount of wealth, privilege, political power or skill in a society. Consequently, Elitism is the belief that society or system should be led by an Elite. For the non-elites or the not-so-elites amongst us, academic excellence is seen as the one way to break into the ranks.
In fact, academic excellence has always been a key metric the society judges the worthiness of a Singaporean. This is the reason for the behaviour of parents pouring money into the billion-dollar tuition industry, in hope to push their children up the academic ladder as high as possible. We cannot blame the academic arms race when the key societal success yardstick is defined this way. The parents are merely investing in education to get the best societal reward for their children.
And now we started to question ourselves, why make our children suffer through the academic stresses? Our government has also encouraged parents to be less ‘kiasu’ about education and hoping that reducing the examinations would be a good way to alleviate the children’s stress levels. But the truth is, elitism is here to stay as long as the societal values do not change.
Elitism and the Class Divide
Channel News Asia recently put together a documentary called Regardless of Class. Class, not race nor religion, is potentially Singapore’s most divisive fault line, they claimed. In a particular telling interview , secondary students from various streams were put together to discuss how they felt about one another.
Joey Heng, a Normal (Academic) student, remarked, “I don’t usually hang out with people from the Express stream in my school, because most of the people in Express stream, they look down on us. They think we are quite stupid, so they seldom talk to us as well.”
On the other side of the fence, a student under the Integrated Programme, Maniyar Kareena Tushar, said “for me to make friends with people from NA (Normal Academic) and NT (Normal Technical), or like neighbourhood schools requires a lot more effort from me.”
Granted, the documentary was highly edited for soundbites and with viewership in mind. Even so, there is no undermining the candidness and the raw emotions portrayed. During our parents’ times, education used to be a social leveller. Has the tide turned? Has education morphed into a social segregator now?
When to spend on tuition
When the entire city sings her song of Elitism, it is difficult not to get caught up in the tempo. It is a consequence of living in Singapore; you either dance to her beat or you get left behind.
To ensure that their children do not get left behind academically, many parents in Singapore send their children for an entire gamut of tuition classes. The Chinese have a saying “勤能补拙”, which translate to “Diligence can mitigate the lack of intelligence”. Tuition allows the “C” kid to score a “B” and allows the “B” kid to score an “A.”
Tuition has become the de facto way for parents to upsize their children’s grades. However, instead of blindly plonking down good money on tuition in the hopes of achieving better results, which in turn leads to a better life outcome for the child, I would like to propose a rather radical solution for parents. It is a departure from the norm and requires quite a fair bit of fortitude from parents to be able to see the plan through.
First of all, we need to accept that not all tuition is helpful. In many scenarios, tuition does little to better the child’s grades. Even when it does, the increase is insignificant in terms of being able to move the child up into the next ‘education bracket’. When that happens, the money spent on tuition is in fact flushed down the academic drain hole.
Let us first take a look at when tuition might be beneficial. Here are some scenarios where parents should send the child for tuition.
- Your kid has a chance to be in the top 10% of the PSLE cohort so they can enrol into the Integrated Programme.
- Your kid has a chance to get into Raffles Institution or Hwa Chong Institution.
- Your kid has a chance to get into Express stream.
- Your kid has the risk of falling into Normal (Technical) stream.
- Your kid has a chance to take the desired subject combination during secondary 2 streaming. Biology and Chemistry particularly important to become a doctor.
- Your kid who is in Normal (Academic) and has a chance to take ‘O’ Levels.
- Your kid has the risk of getting at least 5 ‘O’ Level passes.
- Your kid has a chance to get into Junior College.
- Your kid is taking ‘A’ Levels or International Baccalaureate but is at risk of not qualifying for university.
- Your kid has a chance to take the desired subject combination in Junior College or the preferred course in Polytechnic.
- Your kid has a chance to get scholarships.
- Your kid has a chance to get into an internationally reputable university.
- Your kid wants tuition.
I think the list is quite comprehensive but let me know if you think of other valid scenarios.
What to do with the money saved from tuition?
It was reported that Singapore parents spend over a billion dollars in tuition a year. I have checked with my tutor friends and they roughly estimated that the tuition fees for a primary, secondary and junior college student would cost around $500, $700 and $1,000 per month respectively. If a child begins a tuition regime from Primary 3 all the way the end of his or her Junior College years, it would have cost the parents $81,600.
I believe there is at least 3 better ways to use the $81,600 to develop your children using the money saved from tuition.
#1 Invest the money instead of paying tuition fees
The most obvious way is to invest the money. Our Early Retirement Masterclass trainer, Chris Ng, has always stated that the stock market is the place with the highest equality. If a company declares a dividend, everyone gets the same amount proportionate to the share of the company he owns. Regardless of race, language, or religion. Regardless of gender, education level and social class.
A 4% return per year is realistic and conservative. It does not require excessive risk-taking nor constant monitoring. Imagine you have religiously invested the money on a regular basis in this manner:
- From Primary 3 to 6, investing $6,000 a year (or $500 a month) would yield $25,478.78
- From Secondary 1 to 4, investing $8,400 a year (or $700 a month) would bring the total amount to $65,476.87
- From JC1 to 2, investing $12,000 a year (or $1,000 a month) would further increase the pool to $95,299.78
- Continue to stay invested for another 3 years and the portfolio value would increase to $107,199.29
At 21 years old, your child would have $107,199 to his name. It is not an amount to retire on but it is still a decent sum that would provide the child with a range of healthy options.
Investing does not have to stop there and then; the money could have been left to grow even more. Or perhaps the money could have been used to start a business, or to help with a downpayment of a property, which may or may not lead to the starting of a family earlier. The money could have been used for travel, and for the child to return with a broader perspective of the world.
Not all parents desire these pathways for their child, and not all young men and women are suitable to pursue such opportunities. Many parents still have a deep desire for their child to do well in school, or at least have possess some unique skillset.
#2 Skills Stacking
Many parents I know send their children to piano, ballet, swimming, fencing, taekwondo, and other enrichment lessons. They hope to develop their child into well rounded individuals. It is a laudable move.
While the idea of broad-based learning is good, we can adopt a more ROI-based approach to select which skills to pick up. Some skills are more valuable and more applicable when he or she starts work in the future, while other skills tend to be more recreational in nature. For example, if your child is not musically inclined, there’s no point developing him in this area and make him dread those lessons. It would be better that he picks up public speaking as it is an important skill that will serve him well throughout his working life.
Public speaking is but one example. Working parents would be able to know what skillsets are particularly valuable in the workplace. It would make sense to develop children in these areas from young. Knowing what you now know, what skills do you wished you had? Do better than your own parents. Prepare your children now.
Skills go much deeper than this. Scott Adams, the author of the cartoon strip Dilbert, attributed his success not to his artistic flair. He was the first to admit that many artists draw much better than him. In his book, How to Fail at Almost Everything and Still Win Big, he said that it was a myriad complementary skills that gave him an unique advantage. He added that in a competitive world, it is very hard to be the top 1% in any field and the 99% are just not cut out for that.
His solution is to cultivate complementary skill sets. In equation form it looks like this – Good + Good > Excellent
I would like to quote this meaningful section from the book,
Successwise, you’re better off being good at two complementary skills than being excellent at one. I’m ignoring the outlier possibility that you might be one of the best performers in the world at some skill or another. That can obviously be valuable too.
I’m a perfect example of the power of leveraging multiple mediocre skills. I’m a rich and famous cartoonist who doesn’t draw well. At social gatherings I’m usually not the funniest person in the room. My writing skills are good, not great. But what I have that most artists and cartoonists do not have is years of corporate business experience plus an MBA from Berkeley’s Haas School of Business. In the early years of Dilbert my business experience served as the fodder for the comic. Eventually I discovered that my business skills were essential in navigating Dilbert from a cult hit to a household name. My combined mediocre skills are worth far more than the sum of the parts.
Luck has a good chance of finding you if you become merely good in most of these areas. I’ll make a case for each one, but here’s the preview list.
– Public speaking
– Business writing
– Design (the basics)
– Overcoming shyness
– Second language
– Proper grammar
– Technology (hobby level)
– Proper voice technique
You may agree or disagree with the list but I am sure you have gotten the idea. Instead of splashing money on tuition regimes which your child may or not benefit from, there is the option of developing valuable life skills instead. Your children will continue to reap the rewards for the rest of their lives as they continue their upward trudge on Mount Elite.
#3 Improve the environment
“You are the average of the five people you spend the most time with.”
“Your network is your net worth.”
As cliche as they sound, these phases do have some grains of truth in them. We often underestimate the degree of influence the environment have on us.
So my third solution is this – instead of spending money blindly on tuition in the hope of your child achieving better academic results, spend the money to improve the environment directly.
For example, save the money from tuition. With the amount saved, aim to buy a house in a better neighbourhood. In fact, buy the smallest house in the most expensive neighbourhood you can afford to. This could expose your children to more successful people many levels above you on the Elitism scale.
Or, save the money from your children’s tuition and use it to join a golf club. Spend time at the golf club and allow your child to mix around with children of other members. If your ultimate goal for your children is unabashedly to push them up the Elitism scale, there is no better way than to fraternise with other deserving friends.
The plan can backfire though if your kids cannot assimilate into the ‘better’ environment. It may make them feel inadequate, different, and left out by their peers. Furthermore, not all well-to-do people are good people with desirable behaviours and values. So improving the environment has the greatest risk compared to the other earlier solutions as you have less control over the process and outcome.
The irony is, you are actually accentuating the class divide via your actions to provide a better growing up environment for your children. The risk is your kids may grow up without the ability to empathise with those from the lower social classes. One way to counter it is to occasionally put them in those environments where they could experience suffering or a totally different way of life than the one which they are used to.
3 Takeaway Lessons: You Can Improve Your Kids’ Financial Future
We are a young city-state. In our relentless pursuit of progress and growth, we inadvertently ended up with an entire society fixated on social mobility. The message of Elitism has become ingrained into our population and from the looks of it, it will only become louder and louder. Not everyone can be an elite though, and there will always be people who try but do not succeed.
The good news is that there are ways we can play the game to our advantage. If you find it too late to change your game, the least you can do is to prepare your kids for the game of life in Singapore.
There are times where it makes sense to improve your child’s academic standings. I have listed many possible scenarios. In such instances, tuition would be the proven way of getting ahead. I have also proposed 3 alternatives uses for the tuition saved.
First, it is possible to invest the money so that your kids could have $100k at 21. This could potentially give them a head start against their peers. The second alternative is to spend on skill development classes that could increase the odds of success later in your kids’ lives. Lastly, pay more attention to the environment as kids are very good at imitating and internalising the mentality and behaviour of adults in social settings. It might be advantageous to use the money saved from tuition to insert kids into a better environment.
I have never been an Elite and chances are, I never will. I feel keenly against the segregation, and what bothers me most is the situation where the rich and smarts get richer and smarter because of their inherent advantages.
Many years ago, I choose investing and entrepreneurship as an alternative pathway to success. I cannot play the game Elites play, I have no choice but to define my own space.
In investing, I am able to put academic excellence aside and achieve success. The financial markets do not reward you for your grades or IQ. In entrepreneurship, I am able to help others achieve the same outcome as I have. I hope you will join me in this investing journey.
Co-Founder. Believer of the Factor-based Investing approach. Running a Multi-Factor Portfolio that taps on the Value, Size, Profitability and Momentum Factors. Quant at heart. Believe the financial industry can treat their customers better. Wants to change the world.