Objective | To create an education fund sufficient for your child's university fee.
In our previous post, we discuss how much is enough for you to retire.
In this post, we will discuss the necessary details needed for setting up an education fund for your child.
The method is similar to the previous post. You will need to save a small amount monthly from your child current age till his /her university enrollment age.
The amount saved is parked into an investment portfolio that generates 7% - 9% return (capital gain + dividend yield). An example is Ewpple sample portfolio.
The withdrawal period is 4 years throughout the degree course. The cost of the tuition fee is inflation-adjusted to the withdrawal date.
Objective | To create an education fund sufficient for your child's university fee. In our previous post, we discuss how much is enough for you to retire.
In this post, we will discuss the necessary details needed for setting up an education fund for your child.
The method is similar to the previous post. You will need to save a small amount monthly from your child current age till his /her university enrollment age.
The amount saved is parked into an investment portfolio that generates 7% - 9% return (capital gain + dividend yield). An example is Ewpple sample portfolio.
The withdrawal period is 4 years throughout the degree course. The cost of the tuition fee is inflation-adjusted to the withdrawal date.
We have the following assumptions.
The degree course takes 4 years (Enrollment age 18 and graduation age 22).
Net investment return is 6% (7% - 1% fees).
Inflation rate is 3% (slightly higher than normal 2.5%).
University fee is $6,250 per year @ current dollar ($25,000 total) & inflation-adjusted till withdrawal time.
Analysis
The results are similar to the previous post.
The earlier you start the easier.
You will need to save $105 (if start @ age 0), $149 (if age 5) or $246 (if age 10) per month per child.
The earlier you start the cheaper.
Total deposits for each age group are $22,680, $23,244 and $23,616 respectively.
The earlier you start the more you gain.
The gains from this plan are 196.27%, 165.20%, and 140.26% respectively.
I cannot emphasize enough the importance of education for a child. It's going to be more costly year by year. You need to prepare for it early. Especially if you have more than 1 child.
You will NOT make any money by merely reading this post. You need to take action.
Assignment
Question | How do you plan to fund your child's university education?
If you do not have a satisfactory answer to the above question, please feel free to contact me at ewppleblog@outlook.com.
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