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May 8th, 2014

Save for your child’s education


Don’t delay: Save for your child’s education

Q: My wife and I have two young children and have opened up an account at a credit union to meet their educational needs. We agree this is not enough but what are our options?

“Learn little children before you are old that a good education is better than gold, for gold and silver may fade away but a good education will never decay.” This Jamaican proverb is a poignant reminder of the importance of your children having a sound education; it is a platform for them to achieving great things and bringing a sense of worth to their lives.

Ask yourself, “Am I doing the best I can for my children’s education?”  The reality is that a good, quality education can be costly, especially if more than one child is involved.  Consider inflation, increasing tuition and the field of study and it can be astronomical.

Many parentsknow how fast the years creep up but fail to plan for the educational needs that come with their children’s growth.  You have already started planning by utilizing the services of the credit union but you don’t want to put all your eggs in one basket.

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 a huge strain on your finances.

Our Children’s Investment Starter Plan (CISP) gives parents a head start to building an investment plan for their children, where we match 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 which invests in equities as well as fixed income securities. Not only is this a medium to long-term investment vehicle that offers the potential for capital growth, there is the opportunity for dividend income as well.

Our CISP is complemented by the Student Investment and Protection Plan (SIPP) where an account for your child can be opened from as early as six months old.  The minimum initial investment can be as low as $50, the minimum insurance premium is $25 per annum and the minimum investment is $25.  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. 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.

Here are afew tips to consider:

  • Estimate the cost

Consider how much the tuition fees, living and other expenses might be. One way to do this is to work out how much it costs today, then factor in inflation. If as a parent you catered $100,000 in 1980 for your child’s education, it will now cost about $287,000 in 2014.

  • Cater for every stage

As a parent, you need to cater for the changing educational needs of your child: primary, secondary, tertiary. You can claim tax exemptions for tuition fees paid for education in a foreign institution.

  • Start early

If you plan ahead and start saving early, your chances of achieving the desired amount for further education are substantially greater.
Don’t procrastinate when it comes to saving for your children’s education. Give them the best start in life by coming in and talk to us. Let our investment professionals help you realise your children’s dreams.