Part 1 of a trilogy about how 10 year old Ben learns about money.
Part 1: How to give Daddy a Birthday Treat?
It was the 14th day of Lunar New Year. Ben sat on his bed, counting his red packets. $200 exactly. “Daddy’s birthday is coming,” Ben thought. “I think I can spend $20 to treat him a breakfast at Rocky Masters.”
That evening, he told Daddy excitedly: “Dad, let me treat you to breakfast at Rocky Masters on your birthday!”
Daddy looked touched, but instead of saying yes, he smiled thoughtfully.
“Ben, that’s very generous. But can you think of a way to give me a treat… without spending your Ang Bao money?”
Ben blinked.
“Huh? How to do that??”
Daddy chuckled.
“Well, you still have a month to think about it.”
Part 2: Uncle Tan’s Broken Machine
The next day, Ben went to the neighborhood Kopitiam. Uncle Tan was staring sadly at his espresso machine.
“Aiyoh, Ben! This machine is dying,” Uncle Tan sighed.
“A new one costs $1,800. I have $800, but I’m short of $1000. I can’t make lattes for my regulars until I find the rest. I’m asking my regular customer friends to help chip in, and I’ll pay them back with rewards for helping me. I just need 5 people to lend me $200 each, this will make up the $1,000 I need.“
Ben’s eyes widened.
“Uncle Tan… if I help you, can you help me think of a way to give my Daddy a birthday treat without spending my money?”
Uncle Tan’s face lit up. “Tell you what: If I ask your Daddy to chip in $200 for my coffee machine, to say thank you, I’ll give you one free latte every six months to treat your Daddy this year. Then at the end of the year, I’ll pay back the $200 in full.”
“Uncle Tan, no need to ask my dad. I can lend you my Ang Bao money. Then I can really treat my dad the lattes.”
“Are you serious? But your Daddy must know about this. Do you have a notebook? Let’s write that down! It’s my promise to you.” Ben grabbed his notebook.
📜 Uncle Tan’s Promise to Ben
- Ben chips in $200
- Every 6 months, Ben gets one free latte for Daddy (worth $3.60) ☕
- After 12 months, Uncle Tan returns the full $200
- Total benefit: $7.20 saved + $200 returned
Ben tilted his head.
“Why every 6 months and not every month?”
Uncle Tan chuckled.
“Because saving $0.60 a month is too small to feel meaningful. Better to bundle it — once every 6 months, and daddy can enjoy a proper latte without you spending your money.”
Ben smiled. That made sense.
“Show this to your Daddy tonight. If he agrees, then bring him and your money tomorrow, and we sign on your notebook to make it a deal, your Daddy as a witness. Alright?”
Part 3: What If Things Go Wrong?
On the walk home, Ben was beaming as he told Daddy about the deal with Uncle Tan, showing him the ‘contract’ on his notebook. “Daddy, I’m a businessman! I lent my money, I’m getting you free coffee, and I get my money back end of the year!”
Daddy looked at the notebook. “It’s a good plan, Ben.”
Daddy smiled warmly—but asked gently:
👉 “Ben, how sure are you that Uncle Tan can keep his promise for the next 12 months?”
Ben paused.“He should be able to… right?”
“What if something goes wrong?”
“Like what?”
“Maybe he falls sick. Maybe a new café takes his customers. Maybe his business starts losing money.”
Ben stopped walking. “Then… he wouldn’t have the money to return my $200?”
“Yes, that might happen,” Daddy said. “That’s called Credit Risk. You have to trust that the person you lend to is strong enough to keep his promise.”
“What shall I do?”
“Let’s talk to Mommy later and see what she thinks.”
Part 4: 🧠 Mommy Explains “Interest”
That night, Ben told Mommy everything.
“So Uncle Tan will give me 2 free lattes…”
Mommy nodded.
Then she smiled.
“Ben, do you know what that is called in the financial world?”
Ben shook his head.
“The little ‘Contract’ you and Uncle Tan signed on your notebook means you will purchase a Bond with Uncle Tan. And the free lattes are like interest payment you receive for lending money to him, and it is called a coupon.”
Ben frowned.
“Like discount coupon?”
She pointed gently.
👉 “You lend Uncle Tan $200. In return, he gives you something extra regularly—that extra benefit is like interest.”
“So your free lattes are like the interest rate payment on your bond.”
Ben’s eyes widened.
“Ohhh… so I’m basically earning interest in coffee?”
Mommy laughed softly.
“Yes—but in real bonds, the interest is usually cash, not coffee.”
“A bond is only as good as the person making the promise,” Mommy added that night.
🧠 The Wanyang Lesson
“Do you remember popo’s massage package at Wanyang Massage?”
Ben nodded.
“She paid a lot upfront. I saw her being upset for a while but I didn’t know what actually happened.”
“Yes,” Daddy said.
“In a way, that package behaved a bit like a bond.”
Ben tilted his head. “Really?”
“Yes, but not a good one.”
“Popo paid upfront, it is like lending money to Wanyang for their business operations.”
“In return, popo was promised 30 regular massages + 5 free massages.”
👉 “Those 5 free sessions are like coupon payments — the reward you get for lending money. The massage sessions are like fulfilment of the promise in 30 + 5 instalments in service instead of money.”
Ben nodded.
Mommy added gently:
“I’m just using it as an example to show you that business promises come in various forms, and there are risks in accepting such ‘promises’. “
“But that was not a proper bond. There was
- ❌ No protection
- ❌ No guarantee of repayment
- ❌ No assurance the business would survive.
When Wanyang closed, everything stopped.”
Ben frowned.
“So what happened to popo’s money?”
Daddy sighed softly.
“She had only used 15 sessions. The remaining 15 paid sessions and the 5 free sessions were all gone. She could not get a refund as well.”
💡 The Key Insight
👉 “So it behaved a bit like a bond…”
👉 “…but a very risky one.”
“In a way, popo lost half of her principal, the upfront money she paid for the full package and her coupon benefits (the extra sessions).”
“So sad! Daddy, if popo did not buy a bond, what did she buy then?” Ben asked.
“We probably call this a ‘prepaid service contract with embedded option’… ahem, it’s more complex than a straight-forward bond, a story that I’ll tell another day. Ok?”
🧠 The Most Important Question
Daddy said gently:
👉 “Whenever you lend money, always think: Can this person really pay me back?”
Ben asked, “Will Uncle Tan pay me back? Do I still lend him my money?”
Daddy scratched his head, “Let Mommy and I discuss first?”
Part 5:🌙 Late Night at the Kitchen Table
That night, after Ben had gone to sleep, Daddy and Mommy were sharing a snack in the kitchen.
“Are we sure about this?” Daddy asked, looking at Ben’s notebook on the counter.
“$200 is a lot of money for a 10-year-old. What if Uncle Tan can’t pay him back? Maybe I can just lend Uncle Tan the money instead.”
Mommy took a sip of tea and nodded.
“I thought about that. But look at Uncle Tan’s business. He’s been at that Kopitiam for 15 years. He’s never missed a day of work, and he has a long line of customers every morning.”
“True,” Daddy agreed. “He’s what the bank would call ‘Investment Grade.’ He’s reliable, his business is stable, and he has a good reputation. It’s a safe place for Ben to learn.”
“Exactly,” Mommy said. “If Ben had wanted to lend his money to that new trendy pop-up store that’s always empty, I would have said no. That would be a ‘Junk Bond’—too much risk for a beginner! But Uncle Tan is as steady as a rock.”
“And let’s not forget that he has always been treating Ben every now and then, when he helped us to look after Ben at Kopitiam when we both had to work over-time.”
Daddy smiled. “So, we’re letting him do it not just to get free lattes, but because we trust the ‘borrower’?”
“Precisely,” Mommy replied. “In the world of bonds, who you lend to is just as important as what they promise to give you.”
So the next day, Daddy witnessed Ben purchasing the bond from Uncle Tan with his Ang Bao money.
On Daddy’s birthday a month later, Ben walked into Kopitiam holding Daddy’s hand. Uncle Tan smiled knowingly and prepared the latte. “Happy birthday, Daddy,” Ben said “It didn’t cost me a cent of my Ang Bao!” Daddy laughed and hugged him tight.
Part 6: The Pizza Problem (Interest Rate Risk)
Four months later, the coffee machine was working great. But then, a sign appeared at the Pizza Stall next door:
🍕 “Buy $200 credits and get 2 free $8.90 Pizzas. Credits redeemable in the next 12 months.”
Ben’s jaw dropped. “A pizza is worth way more than a latte! My coffee bond feels… losing out now.”
Mommy noticed his disappointed look. “If you want to get out of your coffee deal, I’ll buy your notebook ‘contract’ from you,” she offered. “But I’ll only give you $190 for it.”
“What?! But I paid $200!” Ben cried.
“Well,” Mommy explained, “Why would I pay $200 for a piece of paper that gives me coffee, when I could spend $200 next door and get pizza instead? If you want me to take your ‘lesser’ deal, you have to make it cheaper for me.”
Ben realized: When better deals (higher interest) show up, his old deal will worth less money.
“Your bond didn’t change,” Mum said gently.
“But now there is a better deal.”
👉 “When new bonds offer higher coupon payments, old ones become less attractive.”
👉 “So if you sell early, the price may drop.”
“In real life, this happens when interest rates rise, new bonds pay more interest, so older ones lose value.”
🤔 Ben’s Decision
“So I only lose money if I sell?”
“Yes.”
Ben thought for a moment… then shook his head.
“No. I’ll keep it. I still like my coffee dates with Daddy.”
Mum smiled.
“That’s a good decision.”
Part 7: 🎉 The Happy Ending: The Promise Kept
By the end of the year, Uncle Tan shook Ben’s hand and handed him two crisp $100 notes. Ben had his $200 back, AND Daddy had enjoyed two delicious lattes that cost Ben $0.
Daddy explained that Ben had earned a 3.6% yield — similar to what good investment grade bonds pay in the real world. “Your first bond, Ben, and a well-chosen one,” Daddy smiled proudly.
🎯 What Ben Learned 📔
- A bond means lending money
- The coupon is the interest payment you receive
- Discounts like latte or pizza are real-life examples of coupons
- There is credit risk
- Some “bond-like” deals can be risky
- Price can change when better coupons appear. If you hold to maturity, you still get what was promised, if the business survived
Ben closed his diary.
This time, he didn’t just understand money.
He learnt that it was possible to use his money to ‘earn’ a return. He understood how promises, rewards, and risk fit together in the real world. 🌱
Disclaimer: This fictional story was written with the intention to use a simplified scenario to explain how bond works without too much technical details and jargons. The story is conceptualised by Christiana Chua and illustrated with Google Gemini. No part or whole of this story may be republished without consent from Christiana Chua. This is not a financial advice. Readers can contact Christiana should you need professional advice on personal finance or investment.
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