Are you
serious about your child university education fund?
If you do, allow me to share with you
the proper steps to plan ahead.
Step 1
Decide where
you expect them to pursue their university studies. Local or oversea? Obviously
it is more affordable to study locally. Well, for local study, you need to
decide whether it is government or private university? It is quite difficult to
get into government university as it is very limited especially for Chinese, so
the best option is to consider for local private university.
Step 2
Let’s say
you option is to consider local private universities. There are basically 2
types of local private universities as far as fees are concerned. Some private universities
fees are much higher and some are lower.
Nottingham,
Monash, Taylor etc fees are much higher , about RM150,000 or more for a four
years Degree.
The others
private universities offer cheaper cost around RM60,000 for a four year Degree,
Tengku Abdul Rahman ( TAR) university is one of them.
Step 3
After you
have decided your affordable and desire universities, the following action is
to know the future fees by the time your children reach age 18. Inflation is
the key player in this aspect. Recommended inflation rate is about 6%.
Let’s say you
opt for Nottingham university, your child age is 1.
Current fee=
RM150,000
Future fee =
RM 403,915 ( 6% inflation after 17 years) refer to the chart.
Step 4
The next
step is to consider what financial tool that you need to create the education
fund. This is very much depend on whether you are a low or high risk tolerant
person. There are 2 types of financial tool that you can use to save for your
children education fund.
1) A conventional education saving plan
2) An investment plan such as investment
linked or unit trust.
You may
choose the combination of both as it give different return rate.
Step 5
Now is time
to consider the amount of money you want and can commit now, you can increase
your saving or investment from time to time. Time is another key factor in
education planning. The longest the time you have the better. The more time you
have, you can enjoy better compounding effect.
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