Finance

Wealthy leaders on financial advice for kids: Investing, budgeting and inheritance

Published

5 months ago

January 23, 2025

Sally Anscombe | Getty Images

Entrepreneur Eric Malka had to completely shift his mindset when he sold his company and became an investor. Since then he’s learned many lessons he’s now passing to his kids.

When The Art of Shaving — which Malka and his wife Myriam Zaoui founded in 1996 — was bought by Procter & Gamble for a reported $60 million in 2009, Malka realized he needed to educate himself.

“When an entrepreneur like me is lucky enough to have a liquidity event, then we’re faced … with managing assets without proper training,” he told CNBC by video call. Investors must focus on being patient and on long-term returns, whereas company founders often look at a short-term plan, “almost an opposite” mindset, Malka said.

He took courses on wealth management, read books on investing and now has a diversified portfolio of stocks, bonds, private equity and real estate, with about 10% allocated to riskier investments. In 2014 he founded private equity fund Strategic Brand Investments.

The lessons learned when you lose are more valuable than the ones when you succeed.

Eric Malka

Co-founder and CEO, Strategic Brand Investments

When it came to educating his children — sons aged 14 and 16 — about money, Malka’s attitude has been to help them learn from the ground up.

“One of the challenges I faced with my teenagers early on, is their belief that it’s very easy to make money by investing through social media and through what they hear from friends,” he said. His older son thought he could generate a 20% monthly return, which Malka described as “very concerning.” So, Malka let him invest a small portion of his savings, hoping it would provide an opportunity to learn — and his son lost 40% of that investment after trading currency futures.

“I hate to set up my child for failure, but sometimes, you know, the lessons learned when you lose are more valuable than the ones when you succeed,” Malka said.

It’s a point that resonates with Gregory Van, CEO of Singapore-based wealth platform Endowus. He and his wife have children aged eight, six and three. He said he’ll be teaching them that it’s important to make mistakes when the stakes seem large to them, though may be small in reality. “The emotional muscle, and humility required to be a good investor is something that people need to develop on their own,” he said.

Teaching kids how to invest

For Dayssi Olarte de Kanavos, president and co-founder of real estate company Flag Luxury Group, educating kids early about money is key.

She and her husband allocated a “low risk” sum of money to each of their three children in middle school for them to pick companies to invest in. “Our children chose Apple, Amazon, Google and Alibaba. All but one had terrific runs. As long as they kept their money in the market and continued to be thoughtful in their approach, we added every year to their nest egg,” she told CNBC by email.

Olarte de Kanavos said her experience in real estate investing taught her the value of patience. “It influenced my business approach by emphasizing long-term strategy over quick gains,” she said. The mother of three described her own investments in the stock market as “very conservative, in order to best manage the huge risks that we take in our real estate business.”

Give them an allowance no later than the first grade.

Dayssi Olarte de Kanavos

President and co-founder, Flag Luxury Group

She suggested having children explain why they want to buy certain stocks, because it “can demystify investing and make it an exciting and integral part of their education,” she said.

Van said he talks to his young kids about the tradeoffs of investing in their own terms. “I ask them: ‘If we invest this $100 and it goes down by $70 next year, how will you feel?’ ‘Do you want to spend $100 today on a toy, or have it turn into $200 in 10 years when you are 16?’,” Van told CNBC via email. “Surprisingly, they are very rational and always go for delayed gratification,” he said.

Van and his wife have investment portfolios for each of their kids, mostly made up of gifts they’ve received during holidays such as Chinese New Year. “Given their long investment horizon, they are in very diversified, multi-manager, low-cost equities portfolios,” Van said, and he shows his children their portfolios’ performance — positive or negative — whenever they ask.

Budgeting and saving for children

Age-appropriate advice is very important, Malka said. His focus right now is teaching his children about budgeting, providing them with a fixed allowance per month.

“In the beginning, you know, they would spend in 10 days what they were supposed to spend in 30 days … now I’ve been doing this for eight months or nine months, now they’re really managing it properly, and I think that’s a skill they don’t realize they’re being taught,” he said. He recommended the book “Raising Financially Fit Kids,” by Joline Godfrey, which provides advice by age-group.

“Give them an allowance no later than the first grade,” is Olarte de Kanavos’ suggestion. “The purpose of an allowance is to allow them to learn to make their own decisions about money and to manage the repercussions that come with their choices,” she told CNBC. “As they get older, teach them about saving, the concept of interest, and the difference between good and bad debt,” she said.

For Roshni Mahtani Cheung, CEO and founder of media company The Parentinc, long-term thinking is important. She and her husband opened a fixed-deposit account for their eight-year old daughter for the money she receives at Chinese New Year, and at Diwali she receives a gold coin. “My goal is for her to grow up financially savvy, confident, and ready to make her own decisions,” Mahtani Cheung told CNBC by email.

Talking to kids about their inheritance

A concern for the wealthy members of advisory network Tiger 21 is how and when to talk to their children about their inheritance. “They are most concerned about their kids leading independent productive lives and don’t want knowledge about the wealth they will inherit to distract them or take them off course,” said Tiger 21’s founder and chairman Michael Sonnenfeldt in an email to CNBC.

Around 70% of the network’s members want to wait until their kids are close to 30 years-old and have established careers to detail what they might inherit — and when, Sonnenfeldt said. “However, about 30% of members want to begin working with their kids in their late teens or early 20s to teach them to become responsible stewards for the wealth they will inherit,” he said. Both approaches are valid, he added.

“I suggest that parents encourage open, values-driven conversations about money and investing,” Sonnenfeldt said.

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Swiss government proposes tough new capital rules in major blow to UBS

Published

2 days ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”