Advertisement

Things to do this Weekend: Speak with a Financial Expert!


How You Can Save For Your Kid’s University Education Without Compromising Your Lifestyle 

How do you as a young parent save for your children’s education?

Like every other parent, you want to give your children a bright future — these days, that means a university education.

Education, however, is not cheap. A 4-year NUS engineering degree cost $25,000 in 2008; by 2016, that figure had risen to $32,000. This is an increase of 28% in 8 years (2008-2016), or a compounded rate of 2.51% per annum.

At this rate, projected university tuition fees and the yearly saving required (assuming your kid goes to university at age 20) are:

Age of Child

Years to Save

Tuition Fee

Yearly Saving

10

10

$41,000

$4,100

5

15

$46,000

$3,100

0

20

$52,000

$2,600


This table clearly illustrates how tuition fees can be expected to increase every year and hence the importance of beginning your saving plan early. You don’t have time to waste.

What do you do? You have 2 main options:

 

  1. Reduce Your Expenses

Typical monthly expenses comprise Housing Mortgage ($1,500), Household ($1,500), Support for Elderly Parents ($1,000), Childcare Fees and Enrichment Courses ($1,000-$1,500), and Car Loan ($1,500).These total $6,500-$7,000 monthly.

While most of these are not necessities, reducing them is tough. Even with a combined family income of $10,000, saving enough for university education would be difficult to manage — and we haven’t even come to insurance, vacation and miscellaneous expenses yet.

Fortunately, here in Singapore there are government grants and schemes you can tap to save on medical and education expenses. These include the Medisave Maternity Package; Enhanced Medisave Grant for New-borns; Enhanced Baby Bonus; Tax Reliefs and Rebates for Parents; Subsidies for Centre-Based Infant & Child Care; MOE Financial Assistance Scheme.

Did you know that simply refinancing your housing mortgages and car insurance can help you save several hundred dollars a month! Speak with Thinkers Alliance to understand how we help our clients save money through this easy step!

 

  1. Invest Your Savings At A Higher Rate

Investing your savings may offer a good alternative, depending on your risk profile. At Thinkers Alliance, we say that managing an investment is not just about maximizing returns but also about minimizing risk and providing flexibility (so you can quickly get your investment back if you require the funds).

You have 2 main investment options:

  • Investing in an index

The MSCI World Index (a stock market index of 1,654 world stocks maintained by MSCI Inc) returned 4.41% per year over 10 years. Note, though, that while the investment is very liquid (ie, it is easily bought and sold), its volatility is also high (ie, its returns can vary a lot).

 MSCI Index Annual Performance

Credit: MSCI Inc

  •  Going for an endowment policy

An endowment policy provides decent, consistent returns coupled with lower risk; returns are typically 2.6% per annum with little risk of losing the money invested. The trade-off is low flexibility: cancel the policy halfway and you have to incur high costs.

Financial tools are available that balance the considerations of return, risk and flexibility, even for limited budgets, while providing income to offset your monthly expenses. Speak with us at Thinkers Alliance to better understand the management of return, risk and flexibility.

 

In conclusion, sending your kids to university is expensive, but it’s not impossible to achieve.

Firstly — and we can’t stress this enough — Start Early! The earlier you begin, the earlier your plan can capitalise on the enormous, well-known power of compound interest — the 8th Wonder of the World, according to Albert Einstein.

Secondly, speak to Thinkers Alliance. We help parents just like you, with circumstances just like yours, secure the future of their children.

We plan for the long term — and we plan on a regular basis. Financial planning is not a matter of getting a single product, or putting in one-off effort. Things change all the time. When they do, we review and adjust the plan accordingly.

We’ll speak to you, understand your specific situation, come up with a tailor-made plan that suits your circumstances — and advise you what to do should those circumstances change.

Call us and secure the educational future of your child.

 

About Us: Article is contributed by Thinkers Alliance, a licensed financial advisory firm dedicated to financial services spanning the personal and premier wealth generation. Hailing a combined 30 years of experience from leading banks, each partner possesses unique perspective and solution to benefit customers.

For the month of March 2017, you will receive a free 6-month personal accident coverage (worth $50) when you contact us at +65 81682248 or ThinkersAlliance to receive free consultation now.

 


Leave a comment