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Thread: Children's Education Fund amount?

  1. #1
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    Children's Education Fund amount?

    Hi, I am struggling to figure out how to calculate the lump sum i would need to invest now that would cover my child's education. I would most likely put the lump sum in a balanced fund or equivalent and ideally not pay in every month i.e. the lump sum now would be sufficient to grow with interest to cover everything.

    I'm getting stumped by having to factor in that money would have to be withdrawn each year at varying amounts as the fees increase for kindergarten to (hopefully) university...

    Any suggestions of templates or examples out there??
    Thanks

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    The problem is, you would have to know what inflation will be, and what kind of proceeds, be it interest or dividends, you would earn, which are the unknowns.

    Perhaps this calculator will make it easier for you: https://oldmutual.co.za/personal/edu...ion-calculator

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    Dave A (20-May-16)

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    Thanks - I guess I need to know what realistically I can expect to earn above inflation over a 15 year period..

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    I have been involved in the marketing and selling of education plans for many years now. I have yet to find any type of online calculator that realistically projects future costs for primary, high and tertiary education. The variables involved in projecting into the future to wide to be of value. In fact most insurance companies no longer offer illustrative maturity values, because they are too misleading.
    So, when it comes to advising my clients on these products, my first recommendation is that you determine what you can comfortably afford to save every month. There is no point in starting an investment, where you need to reduce or stop contributions during the term. Yes life may "get in the way" during your savings period and you do need a product that is flexible enough to meet these challenges, but I believe that looking at the end result and then working back to a high initial savings contribution -to meet that final goal - is not the correct way to invest.
    Next you need to choose a product that is flexible and can be adapted to unforeseen future events. I preferred to use a unit trust-based investment as the costs are low, the product is extremely flexible and transparent and you can access funds along the way. We do a risk analysis to find funds that suit your risk appetite and investment goals.
    The two most important aspects of an education plan are setting up a dedicated monthly investment amount and starting as soon as possible. The effects of compound interest are simply huge over the longer term!
    We are all quite aware that future education costs are enormous - you don't really need confirmation of this, do you?

  6. Thanks given for this post:

    Dave A (11-Jun-16)

  7. #5
    Gold Member Houses4Rent's Avatar
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    I bought a property for each child. By the time they finish school they can potentailly move in there, rent out the spare rooms and from that income pay for their further education etc. Or onc eit broek even, they do not move in and the positive cash flow still pays for what they need.
    Since you seem to have a lump sum available thi smight be a good option.
    Houses4Rent
    "We treat your investment as we treat our own"
    marc@houses4rent.co.za www.houses4rent.co.za
    083-3115551
    Global Residential Property Investor / Specialized Letting Agent & Property Manager

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