Do you start saving or invest for your child tertiary/university education?

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I would recommend both savings and investments for yourself and set up a will so that your wife and son will be the beneficiaries. Savings in Singapore Savings Bond and fixed deposits would serve as emergency funds whereas investments in ETFs would serve to grow your funds. I do not really recommend endowment (education insurance).

Hi RM, I understand your concern, but as you mentioned, you are right, a more aggressive portfolio should have a higher than expected return than a conservative guaranteed endowment policy.

So it's always good to have a mixture of both. It shouldn't be one or the other.

Firstly, make sure you're insured to cover for their education fees should you pass on or fall ill. This should be from your own personal income protection insurance.

Next, understand that if your kids are just born, you have a 20 years or so investment horizon, a good long term horizon to take some risk. But as they age, and your investment horison shrinks, you'll need to start converting your variable return into guaranteed returns. So it ends up having a strategy to have a good combination of both.

I've worked with professionals and especially doctors whose kids they expect to also enter medical school where educations costs can come up to easily a few hundred grand. This is a strategy I employ for them, plus saving for excess should they want to start their own practice after housemanship.

So education planning is more than just saving for school fees, there's a few considerations.

As a rule of thumb, I would encourage you to put aside 5% of the household income to save for this endeavour.

If you'd like to work with an Independent Financial Advisor who runs a specific practice for education planning, do consider dropping me a message on facebook.

Hi RM,

I think why people are not keen to an Education Savings plan is that they feel that the returns are not ideal or optimum, which might be true if you are just looking at numbers. But endowment plans are one of the best solutions to tread against inflation, and as they are usually participating policies, you can be assured that your yearly returns are consistent as insurers smooth out bonuses, making sure that during good years, the reserves will be built up so that during the not so good years, there are reserves to be tapped on so that customers will get consistent bonuses as mentioned earlier.

Also, yes, it is good to look into getting a whole life policy. As that looks out for your family in the event something happens, be it death, total permanent disability or critical illness.