A college education is one of the most important and expensive costs of having children. Most parents understand the crucial need to provide for their children’s education and strive hard for it. However, well-intentioned parents often overlook the timeline and put off the planning work till reality sets in.
Getting an early start has proven to relieve many families of the financial strain and stress a college education can cause. In one of my previous article, I’d briefly touched on education planning. Today, let us dive into the details and work out the solutions.
1. Cost of a College Education
The tuition fee for an undergraduate degree in Singapore range from ¹S$6,360 to S$18,230 per year. This figure is applicable to Singapore Citizens only, and after deducting the MOE Tuition Grant. For the tuition fee alone, parents can plan to save approximately S$26,000 to S$73,000 per child for a 4-year degree program.
Tuition fees for overseas education go up significantly. Across the ²world’s top universities, the tuition fee in the USA ranges from US$41,820 to US$45,016 (S$53,075 to S$57,121) per year. Whereas in the UK, it ranges from £14,415 to £25,500 (S$29,616 to S$52,387).
The estimated amount to be set aside ranges from S$119,000 to S$229,000 for a 4-year degree program.
In this increasingly competitive world, some may consider postgraduate programs to keep up with the challenges and demands of their selected professions. In Singapore, the annual tuition fee starts from ³S$7,050 to S$22,450. An ²overseas education in the USA and UK are approximately US$47,073 (S$59,722) and £26,877 (S$55,199) respectively.
Miscellaneous student fees, special term fees and insurance fees are some of the costs to prepare for. For overseas education, living expenses, accommodation and air flights must be considered too.
Another crucial factor is inflation. In recent years, the cost of education has been rising faster than the regular rate of inflation. A prudent approach should be applied while planning for your child’s education.
2. Saving Versus Investing
Many parents refer to these accumulated college funds as savings. In reality, simply saving isn’t enough, especially when it comes to combating inflation. For those with high positive cash flow, it’s easier to set aside a larger amount to offset inflation. Having said that, it’s unwise to have this hard-earned money be devoured by inflation.
Due to the above reason, many prudent parents tend to look into investment, especially at their early phase of wealth accumulation. As this is a long-term financial goal, you’re in a good position to withstand a higher risk investment in return for higher gains. When your child’s milestone draws near, you can shift your funds to less risky options.
Investment can be extremely complex and challenging, even for experts. First, you need to determine your investment profile and risk appetite. With a proper understanding of that, you can move on to allocate your funds into different investment instruments and commence on stock picking.
Keep in mind that over time, your investment appetite will change, along with your lifestyle and family commitments. So once you’ve made your decision, you’ll need to conduct an annual review. It’s vital to perform periodical profiling and balance stock allocation accordingly so as to optimize your investment portfolio.
The key here, is to have two things working in your favor: time and a high rate of return. In this way, your hard-earned money will be working harder for you, even after you’ve achieved your financial goals.
As the investment market is often volatile, you’ll need to arm yourself with the latest news and trends, and keep abreast of developments in the country’s economy and the companies that you’ve invested in. This alone is almost a full-time occupation!
Investing in the right tool is important, likewise when it comes to investing in your Financial Planner. Entrusting him or her, and working together to accomplish your financial goals could be your most valuable investment, so get started today!
¹ *Source: https://share.nus.edu.sg/registrar/info/ug/UGTuitionCurrent.pdfl
² *Source: http://www.topuniversities.com/student-info/student-finance/tuition-fees-worlds-top-universities
³ *Source: https://share.nus.edu.sg/registrar/info/gd/GDTuitionCurrent.pdf
US$1 = S$1.26890
£1 = S$2.05458
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Jamson Chia graduated from The National University of Singapore in 2003 with Bachelor of Engineering (Hons). Possessing an interest in financial planning, he furthered his education, and obtained the prestigious title of a Certified Financial Planner (CFPCM) in 2007. He is also one of the few privileged advisors in his company to attain the Business Insurance title.
Jamson currently heads the team as an Financial Services Director, where he is responsible for providing quality service and advice, especially in the Small and Medium Enterprises and High Net Worth Market. He is also responsible for grooming new talents, where he holds an impressive track record. Various consultants under his training have qualified for numerous awards ranging from AIA’s Million Dollar Club, to the highly acclaimed international Million Dollar Round Table (MDRT) award.
Within the first 5 years of his career, Jamson has achieved an admirable feat of being a member of the Million Dollar Round Table for 3 consecutive years, and he is currently one of the youngest directors in AIA.
Jamson is a Financial Services Director with AIA. The statements or opinions expressed on this site are his own, and do not represent those of AIA.
This post first appeared on LinkedIn.