While no child is alike and each family is unique, a common tread run deep in the heart of every home – the desire of parent is to give their children the BEST a course in miracles book possible and see them grow into their full potential. However, life is full of unplanned surprise and the path to achieving this desire may be a convoluted one. That’s where a sound investment strategy comes in. With flexible planning and a suite of investment options that are available, you may help put your child on the journey to a valuable college degree. Here are a few TIPS that may help kick-start you planning:
First, make an estimate of the costs that will go into your child’s education. Your cost should take into account inflation over the investment or saving period. With the estimate as a guide, start piecing together your investment plan. There are many education planning option, each with its own risks and benefits, which you may use alone or simultaneously to achieve your goals:
a. AN EDUCATION SAVING PLAN is a good place to start as it aims to offer payout when your child enters college. Some education savings plan may also provide protection benefits to the child and or parent.
b. PROPERTY may provide rental yields and capital appreciation to fund your child’s tertiary education. Rental yields may be used to top up your child’s education fund savings or pay for your child’s tuition. Should the value of your properties appreciate, it may be sold to obtain capital gains. Investing in property has its risks too as the property market may fluctuate in the future and you may not be able to get the selling price you hope for.
c. UNIT TRUSTS and STRUCTURED INVESTMENTS can be added to your investment plan, if they fit your risk profile, time frame and target goal for your child’s education.
d. AN INVESTMENT LINKED PLAN can be tailor-made to grow your wealth with the flexibility to choose the type of funds suitable to your risk profile and goals. Your child may be nominated to receive protection benefits, should the unforeseen happen to you. Usually, you would have the option to make regular contribution or a single contribution in line with your financial standing.
Set in motion action plan that makes savings or investing automatic. Many savings, investment linked plan and unit trust funds often regular monthly, quarterly, half-annually or annual contributions option. By investing regularly, you will also benefit from Dollar Cost Averaging (DCA) which average out the high and lows of an investment and possibly lower the total average cost per share of the investment.
Regular reviews of the plan will help you stay on track with your target goals. Review it at least annually and with every major life change such as new child, career advancement or move to a bigger house. Find ways to top up if it is not up to speed in reaching your investment goal.
You could consider increasing the amount of contribution annually or top up your regular contributions when your income increase such as when you receive a bonus or get a pay rise, in order to meet your target earlier or achieve an even large fund.