How should I help my child of age 3 save around 100K when he reach around his uni years? Current, savings account interest not a lot?

Hi Alicia,

Generally there are two ways to achieve this.

• You can invest, but you will have to manage your investments. While the potential returns of investments can outstrip most other lower risk instruments, you must remember that they are not guaranteed. Does it mean that should there be a market crash when your child needs to go to university, he has to delay by a year or two because you are waiting for the market to recover?

• You can save in a safe manner with an endowment plan. You don't necessarily have to commit for the full duration till your child goes to university. Saving $300/mth in a decent endowment plan for just 10 years should nett you anywhere from $50K to $60K maturity payout at year 20. However, the returns won't be on the level of stocks, but they are at least safe and guaranteed.

So what's the right answer? There really isn't a model answer for your situation. However, given the fact that university education is a time bound commitment (i.e. there is a pretty specific timeframe for your child to go to university, only affected by whether he/she goes via the JC route or poly route and National Service), at least a portion of the funds should be grown in a safe manner, and the rest of the funds can be invested to be liquidated at a good time later on.

Whatever the final decision you undertake, it will still be better than borrowing from the bank to fund the uni fees. I'd rather much be paid returns for my investing/saving than to pay interest just because I took a study loan. This is why planning and execution early on is important.

Hi Alicia!

First of all it's a good thing that you are thinking ahead to plan for your child's education fund.

Before we dive into the options available, I would like to clarify with you 3 points:

1. 100k seems to be a sizeable amount but are you looking at 100k in present value or the value of 100k 20 years from now?

2. Additionally, are you looking to provide your child with an opportunity for an overseas education or is this fund strictly for alocal university?

3. Lastly, the inflation for education stands around 4% per year. SMU course fee for the 2020 intake is $39,600. Even with a conservative amount of 3% per year inflation, that will grow to be around $71,500 in 20 years. This is without factoring in other potential costs such as:
   -Misc Fees
   -Study Materials
   -Exchange Programme
   -Staying in Hall Etc..

When you have the answers to the above pointers, I would love to get in touch with you to discuss the possible options in detail which you can take to achieve the goal of having your children's education fund in 20 years.

You may reach out to me at my Facebook, Edward Hee, cheers!

How about endowment plan? not ilp

I am doing this. I set up a simple RSP with a Robo and set aside their CNY AngBao and Birthday money into this account.

When they are of school going age and get their allowance, I also encourage them to plan their expenditure and when they have savings, they pass to me to put into this same account.

Not really intended for uni fees, but as a way for them to see the power of compounding, and maybe offset part of the fees in the future.