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April 16th, 2013

Saving for Children’s Education


As a parent, you want to provide the very best for your children, which includes giving them a good tertiary education.  But the cost of a quality education can be hefty and usually cannot easily be absorbed into a monthly or yearly budget. For this reason, you’ll need to plan very carefully for your children’s education.

The growing concern for many parents is their financial readiness for giving their children a tertiary education can be prohibitive. By the time one factors in the costs for books, spending allowances, housing and food and inflation, the total bill can be astronomical.  It can even be substantially higher when tertiary education is pursued overseas.

Many parents are simply not ready for such a financially draining situation. Some parents aren’t even aware of its impact until it’s too late – when their children have only a few years left until graduation from secondary school.  To start saving for your child’s education, it’s a good idea to sit down with a financial advisor and map out your child’s complete tertiary educational needs. Consider the following points:   How old is your child? What year will your child begin his or her tertiary education? What about post-graduate studies?  Will your child live at home or in residence during university?

By taking into account your child’s age, and the years in which he or she will begin school and start tertiary education, a financial planner will help you to determine how much you need to put away each month.

You’re not alone if you think a financial goal like this seems intimidating or out of reach. But with careful planning and early saving, it doesn’t have to be. Starting early and investing consistently are two key factors in reaching your goal.  At the Unit Trust Corporation (UTC), we offer a range of investments and saving solutions aimed at helping you cover the cost of your child’s education – without putting huge strain on your finances.

The UTC has engineered the Children’s Investment Starter Plan (CISP) that gives parents a headstart to building an investment plan for their children, where the Unit Trust matches the first five units in each account with an additional five units – so for the price of five units you get 10. The proceeds of your CISP are invested in UTC’s Growth and Income Fund, so not only is this a long-term investment vehicle that offers increasing value through capital growth but income as well.

By investing in shares of local companies trading on the stock exchange, government and government guaranteed bonds, short term securities and foreign equities, parents through diversification can, also reduce the impact of volatility and risk on their investment.

Another education tool worth considering for your education arsenal is the Student Investment and Protection Plan (SIPP) where the minimum initial investment can be as low as $50, the minimum insurance premium is $25 per annum and the minimum investment is $25. An account can be opened for a child from as early as six months old. Once the period of insurance is determined by the parent or adult opening the account, the child is protected 24 hours a day, seven days a week, at home as well as at school once he/she is a full-time student.

By combining an investment plan with protection through accident and medical insurance, the proceeds of your SIPP, like the CISP, are invested in UTC’s Growth and Income Fund, so your SIPP investment continues to grow throughout your child’s school years and has a long term capital guarantee.  Like the CISP, this facility affords investors protection of capital, once the funds remain invested for a minimum of three years.

Both plans cater for an investment strategy tailored to meet your child’s education and allow you time to build your investment at a comfortable pace, investment products to help parents fulfill the dreams of their children.  The earlier you start saving, the more you can benefit from UTC’s investment vehicles that invest in a diversified mix of securities that offer an opportunity for capital appreciation as well as income.

Saving for your child’s education is a priority for many parents. Whether they have only just begun to take their first steps or just given their  first smile, the sooner you start planning for your child’s education, the less stress and anxiety you face in the future.