Saving for university

[expat yorkshire]

As i will be shelling out for univerity fees in 16 years time for EPYboy. What does the forum consider is the best way to save for this.

1. Put a fized amount into an off shore fixed interest sterling deposit account

2.Put the mobey into a steling offshore diversified fund

3.Buy what they call "insurance " here ....which is really a fund plus life insurance .


I favour 1 or 2 and am not convinced on option3 , the inflexibility and fees are what put me off

any other ideas.

[Fat Bob]

Yes, 1 or 2, or a mixture of them. And don't call it "saving for university". Call it "savings" then it can be used for anything should other things come up (so you continue to save even if you get big bonuses etc)

[baloo]

Yeah, forget 3.

Not sure why you need it to be offshore though EPY. Plenty of funds and term deposits can be had here.

[BFG]

I've done a mixture of one and two for both BFG-lettes. So far so good.

When I said that we could use BFG Minorette's fund for a holiday as she is only a girl, I got a slap from Mrs BFG. Women eh?

[Aliya]

So you would put an amount in say every month? If it only gets interest, then you would be looking at a 3-5% increase each year - depending on what currency saved in - ie NZ$ high interest, GPB low interest.

[BFG]

GBP offshore - 6-7% interest.

[baloo]

So you would put an amount in say every month? If it only gets interest, then you would be looking at a 3-5% increase each year - depending on what currency saved in - ie NZ$ high interest, GPB low interest.

Work out what currency the school fess will be paid in and invest in that currency. You'll never win the FX race.

[Aliya]

Really? How can lah?

[BFG]

Really? How can lah?

If that was aimed at me - look at the buldings ocieties - Scarborough, etc...

[Fat Bob]

you can get 6+% at many uk banks, remember, the UK is counted as "off-shore" if you're living in Singapore. If the total earnings in the UK are less than the tax amount the you can get tax paid gross.

[Lili Von Shtupp]

For young children, like Baby Aliya, I'd say go for more aggressive funds, because you've got the advantage of time so can handle market ups and downs. Plunk a big chunk down, then monthly contributions are the best way to go. IMHO, consider taxes you may have to pay in gains and fund manager fees as opposed to playing the currency game - here in Singapore you'll have no gains taxes, a big plus. And don't use it for holidays! You'll wipe out your entire "time-value-of-money" advantage!

There are gobs of tools on the net that will estimate the future tuition costs when your child is ready to go, then you can use an online interest calculator to figure out how much your initial lump sum can be, then what kind of monthly contributions you need to make to reach your desired amount in x amount of years. If you invest in aggressive, diversified funds you can calculate 8-9 percent interest.

[expat yorkshire]

If that was aimed at me - look at the buldings ocieties - Scarborough, etc...

Scarborough isnt that a northern building society

[Kooky]

Aren't we all getting old?

[azzam]

I did it a different way cos I dont know nuffing about all that stuff.

I found a co-operative society founded especially for this, that I put a monthly amount into. Then when left he school, they returned the lump sum and doled out the interest progressively directly to my son while he was at university.
Maybe you could think about doing this kind of thing as a supplement to the more agressive funds
What worked for HIM was this...
I didn't want to put heavy pressure on him, as I was well aware that he could grow up to be a very happy and successful plumber. But my secret wish was for him to have a university education. So, this society said the fund could be used for any kind of tertiary study, at any level. And they gave my boy a certificate and sent him regular newletters and access to a long list of people in various careers that he could write to over the years about their jobs. He always had the certificate framed on the wall, so he knew he could go anywhere, but dropping out was not an option. It was subtle, oblique pressure but not directly from me. And it worked a treat. He just graduated with an Industrial Design degree

[Lili Von Shtupp]

That's a great story, Azzam, and a very intriguing society. Can you share the name?

[BFG]

If that was aimed at me - look at the buldings ocieties - Scarborough, etc...

Scarborough isnt that a northern building society

It is. I thought I'd donate to supporting the 3rd world...

[Aliya]

I likes it too and if it is a kiwi set up which it must, even better!

[azzam]

It's Australia and New Zealand. I was just looking at their website and it seems to include Secondary fees now too. Could be useful if you stay in Singapore, A, and little Fred goes to the Ozzie school

http://www.asg.co.nz/browse.asp?ContainerID=about1

[Burbage]

If things keep going the way they are going at the moment then everyone will go to university, everyone will get a first class degree, and no one will know anything.

Save the money and get him to use it to start a business and do whatever short course might be vital.

[Tack]

And start saving now to buy the beer they drink when on holiday with you

We made sure they'd get home student status for the UK but realise this is prob not an option for ExPY. Worth considering though for anyone whose kid has a passport where you own (or would consider owning ) property. I know a few folk who've pulled this off for the UK.

[Fresh Mint]

2.Put the mobey into a steling offshore diversified fund

Option 2 sounds the way to go ....

Show me the mobey.

[Aliya]

If I was planning say 18 years ahead how much should I put into the start up fund? Putting $10k on say 6% interest only ends up at about $30k at the end of 18 years which isnt much.

[expat yorkshire]

i would say 20k a year is more like it

[Burbage]

And you haven't taken inflation into account yet. And if anyone can work out how university fees relate to inflation they'll be doing a pretty good job.

Still all you can do is busk it.

Low risk though. You don't want to end up with nothing.

[Lili Von Shtupp]

OK, let's see here. According to the Australian government website, 2008 international tuition fees for a bachelor degree costs between AUD10,000 to AUD13,500 per year. Let's work with the higher figure, just to be on the safe side. OK, so we're looking at an annual tuition of AUD13,500, multiplied by four years, which gives us AUD54,000 total. http://studyinaustralia.gov.au/Sia/en/S ... uitionFees

Now, to find out how much that would set you back in the future, financial experts calculate inflation at 2-3 percent per annum, so let's go with the higher figure, to be on the safe side. At an increase of 3 percent per annum, after 18 years this figure will be AUD89, 153. Let's round that up to an even AUD90,000.

We don't know what the future will hold for the Australian dollar or the Singapore dollar, we only know today's exchange rate. At today's rate AUD90,000 is worth SGD112,556. So we can estimate that we'll need this figure for her education in 18 years. That's really the best we can do.

OK, now we go to our trusty Compound Interest Calculator. I like Money Chimp's: http://www.moneychimp.com/calculator/co ... ulator.htm

And it looks like, Aliya, with an initial investment of SGD10,000 at an interest rate of 6 percent per annum, you'll need to invest an additional SGD3,000 per year, or SGD250 per month, to reach a future value of SGD126,823 in 18 years.

And there you have it! Not so scary. (I'm a geek, I actually enjoy this...)