In Singapore, most parents wish for their children to receive a good university education. Despite the fact that two in three adults think university is expensive, 71.3 per cent of them still believe that it’s ultimately worth it.

And this trend is only expected to continue with the increasing number of university graduates – the proportion of university graduates among residents aged 25 and above jumped from 23.7 per cent in 2010 to 33 per cent in 2020.
This begs the question: exactly how much is enough? Ensure the best for your children’s future – provide for their tertiary education by backing it up with a comprehensive financial plan.

Here are some pointers to take note of when you are building your kids’ education fund:

1. There’s no such thing as starting too early.

In fact, you can start right now. Take stock of what you currently have and start saving early to reap the benefits of compound interest, which you can calculate using compound interest calculators online.

You should also take into account, and estimate, the cost of university fees. Currently, in Singapore universities, a four-year undergraduate programme can cost more than S$30,000 for local students. If you’re planning to send your child overseas for their university education, expect this number to be doubled.

Remember to factor in inflation in your savings plans, which is at least 2 per cent per annum.

 

2. Diversify your investment portfolio.

Never put all your eggs in one basket. In other words, always build a diversified portfolio with different asset classes including a good mix of bonds and equities.

For instance, you can tap on Singapore Savings Bonds (SSBs) and Singapore Government Securities (SGS) as part of your portfolio to generate more stable returns.

Nevertheless, you can also consider having some exposure in equities to generate higher returns over the long run.

If you are not sure which stocks to pick, you can opt for Exchange Traded Funds (ETFs), which invest in a diversified basket of stocks that tracks a particular market index or sector.

 

3. Commit to a disciplined savings plan.

Endowment plans are primarily designed to help you grow your savings with fixed returns, which makes them suited for growing your child’s education fund. What’s more, you can choose a good pay-out age to match your child’s educational milestones.

On top of endowment plans, you can also sign up for a regular savings plan that earns you higher interest. For instance, Maybank’s Save Up Programme rewards bonus interest of up to 3 per cent per annum for any one of its Qualifying Products under the programme.

Saving up for your children’s education through insurance plans is another option. Insurance products have the potential to generate higher yields than regular savings plans as they are longer-term, and can protect against other financial planning concerns or unexpected events.