Education Planning - Smart Kids Need Smart Parents
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All parents want their children to have a good head-start in life. So investing in good education is absolutely part of the family cash flow equation. But tertiary education cost is not cheap and is on the increasing trend due to inflation. The presentation will illustrate how 7CAPITAList @ Financial Alliance Pte Ltd work with you closely to come up an appropriate measures to help securing your child's success.
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Education Planning - Smart Kids Need Smart Parents
- 2. Saving for your child’s university education is a lesson in itself.
- 3. Singapore Today • Graduates earn 135% more than those with a Diploma Education. Education Level Starting Annual Income Degree Holders $29,000 Diploma Holder $21,400 Source: www.salarysingapore.com; Hay Group’s Fresh Graduate Pay survey for 2010
- 4. Today’s University Costs • While the value of a degree is growing, so is the cost. Tuition Fees in Local Universities (Per annum)* Years 1986 1992 1996 % increase 1986 - 1996 2011 % increase 1986 - 2011 Non-lab Courses 1,200 3,750 4,100 13.07% 7,590 7.66% Lab Courses 1,200 4,550 5,150 15.68% 7,895 7.79% Medical/D ental 1,300 11,450 13,200 26.08% 16,680 10.75% *Refer to NUS & NTU
- 5. Today’s University Costs • The cost for a local university education has risen between 7% to 11% per annum in the past 25 years. • Overseas education cost will continue to rise in the coming years.
- 6. Future University Costs • If your child is in kindergarten, university costs in 15 years may be considerably more than you think. Projected Average Costs in 15 years (Tuition and Room & Board for 4 years) Local University $162,156* US University $320,051** Above university cost is based on 5% annual increase • NUS/NTU • ** Hawaii Pacific University (US)
- 7. Cost of Delay • In 15 years, local university education will cost $162,156. Your Savings Goal : $162,156 If you starts saving: Years to save Monthly Savings* NOW 15 $596 3 years later 12 $808 5 years later 10 $1023 *Assuming a plan that yields a 5% return compounded annually.
- 8. Cost of Delay • The later you start, the more you need to save and the more difficult it is to reach your goal.
- 9. 6 options to fund Education fund 1. Fixed Deposits – Relatively safe investments but offer low risk and low growth. 2. Shares – Return on shares depend on company performance and overall market conditions.
- 10. 6 options to fund Education fund 3. CPF – Can be used to pay for education either in the local University or Polytechnic. – Maximum loan allowed is 40% in excess of minimum sum in Ordinary or Special Account.
- 11. 6 options to fund Education fund 4. Life Insurance – Savings are maximized because the cash value accumulates on a tax-free basis. – Death benefit guarantees education funds for children.
- 12. 6 options to fund Education fund 5. Scholarships – Granted on merit basis 6. Financial Aid – Bursaries, grants and student loans help to defray the cost of education.
- 14. 3 Important Components 1. Savings – A plan which can help you put away a sum in a disciplined manner and yields attractive returns.
- 15. 3 Important Components 2. Protection – A plan which can guarantees that if something unfortunate were to happen to you, your child will still have the means to go university.
- 16. 3 Important Components 3. Advice – A plan which can provide you valuable resource and services through the years leading up to the important university selection process.
- 17. At Financial Alliance, we are able to provide all these components to meet your needs. It is known as the University Savings Plan (USP)
- 18. Smart Kids need Smart Parents The most important lesson you can learn is: The sooner you begin to save, the faster your money will grow. Let’s us helps you begin your savings plan today.
Editor's Notes
- [After introduction & warming up, refer to the sales tools.]Securing Your Child’s Success with Financial Alliance
- Saving for your child’s university education is a lesson in itself.
- Mr/Ms XXX, are you aware that today university graduates earn 35% more than those with diploma?In other words, today, business graduates are earning on the average $2,418 monthly as compared to $1,784 for those with a diploma.Would you agree that a degree is crucial to your child’s future success?
- Are you aware that the cost for education is also rising?
- The education cost for local universities has risen between 7% to 11% for the past 25 years.Today, the average cost for tuition fee per year in NUS is $7,500 for non-lab courses and $16,680 for medical courses.
- University cost is assumed to increase at 5%. If you child is now 3 years old, in 15 years, education cost in a local university will be $162,156.LOCALTuition fee = 7500Room & Board = 12,000Total cost per year = 19,500 PV = 19,500 x 4 =78,000N = 15I = 5%FV = 162,156US UniversityTuition Fee per year = 26,691R&B per year = 11,797Gross cost = (11,797 + 26,691) x 4 = 153,952I = 5%FV = 320,051
- If you start saving now, you would need to save $596 per month. In 15 years, you would accumulate the entire education cost of $162,156.(assumed 5% compound interest rate)However, if you wait for 3 years, you would only have 12 years to save. Your monthly savings would increase to $808.
- Would you agree that it is better to start savings now?
- You may be asking yourself, “How are you going to afford that?”Let’s take a look at your savings option.Fixed Deposits – They are relatively safe investments but offer low risk and low growth. The interest on these investments are also taxable.Shares - Return on shares depend on company performance and overall market conditions.
- CPF - Can be used to pay for education either in the local University or Polytechnic. The maximum loan allowed is up to 80% of your investible savings or the balance in your ordinary account after setting aside $X in ordinary & special accounts. (updated April 2012)
- Life Insurance - Your savings are maximized because the cash value accumulates on a tax-free basis.The death proceeds guarantees the education funds for the children.
- Scholarships are awarded based on merit & performance. As such, not everyone is eligible.Bursaries, grants & study loans can defray education costs. However, they seldom cover the full cost and are awarded based on merit.The key is to start saving now!
- What then Makes agood university savings plan?THERE are 3 important components.
- Firstly, you will need to a plan which helps you put aside a sum of money and gives attractive returns.
- Secondly, a plan which guarantees that if something unfortunate were to happen to you, your child will still have the means to go to university.
- Thirdly, you would need advice to help you or your child to make information decisions on the selection of universits
- Do you feel that getting started is occasionally difficult and sometimes a little confusing?I can understand how you feel. That’s why we have created a University Savings Plan (USP).The most complete university savings plan.With USP, we will help you to set a reasonable savings goal & recommend suitable plans to help you reach your goals.
- Smart kids need smart parents.So the important lesson we can learn is:The sooner we begin saving, the faster our money will grow.So let’s take a closer look at how we can help you.[Use the PFR together with FNA worksheet to calculate the needs]