What, specifically, do you want to accomplish with an education funding plan?
• Ensure that a child or grandchild can study in the college/university of his/her choice
• Cover the full cost of a four-year university education
• Contribute a significant portion of the cost of a four-year education
• Establish an education savings fund for a newborn child or grandchild
• Create a fast track education savings fund for a child already in primary or secondary school.
The first thing you should do is to find out how much the university education will likely cost for your child.
With university costs increasing faster than inflation, it is difficult to know how much you will need to save between now and the time your child or grandchild enrols. The following are some of the issues to consider:
• Public university or private college
• Type of course (business degree, engineering, medicine etc)
• Country of study (e.g. Malaysia, Australia, United Kingdom, United States and etc)
• Number of years left to enrolment
After determining the type of course and location of study, you will be able to estimate the rough education for your children. Once you have done that, you will now need to analyze your savings requirements.
To calculate how much you need to save, you will need to determine the following:
1) Period – How many years left until your child starts his/her college/ university education?
2) Rate of return – How much will your savings/ investment yield until your child goes to college/ university?
Use our Education Calculator to forecast how much you need to save from now to achieve your children’s education goal.
Designing a good plan to pay for a college/ university education is more than looking up the costs of a few good college/ university. A good education funding program takes into consideration a number of factors:
• Affordability — How much can you realistically set aside in a given year?
• Flexibility — How easily you want to make changes in your savings or investment plan?
• Risk suitability — What is your tolerance for investment risk? How much risk is appropriate for the savings timeframe you have available?
• Tax efficiency — With tax efficient investments, the value of your education savings program may be greater than you realize.
Another important consideration is to structure your education plan so that it can be funded whether you live, die or become disabled.
Depending on your individual situation, strategies and financial affordability, the funding vehicle may include:
• Education insurance
• Education savings plans
• Savings account
• Fixed deposit
• Unit trust funds
Please contact us if you need to discuss more on your education funding requirements and options. Our financial advisers would be delighted to assist you.