Thursday, April 1, 2010

Mama nak duit…Walid nak duit…

SPM 2009 results are already out. A total of 7897 students achieved straight As (A+, A, A-) in all subjects and out of that, 214 students achieved straight A+ in all subjects. The number of students getting straight As is increasing each year. For the 7897 students, getting a university placement and scholarship may not be a problem. Scholarships from government, private sectors, GLC, banks, multinational companies are already being advertised in newspapers. But can these scholarships accommodate all the students? How about the other good students who got 6,7 or 8As with a or some Bs. How about average students? Do they still have chances to grab the scholarships?

For a mama like me who has small kids in 2010, what is going to happen in the next 15 years when my son sits for his SPM (maybe SPM is called something else)? The world is getting more competitive, so young parents today need to think of their childrens’ future and most importantly their childrens’ education fund.
Here I list some of the ways that we can use to build up our kids education fund

1.      Education Plan with Insurance Company
Most of the insurance companies have education plan covering kids starting from 1 month old to 25 years old. The plan is usually divided into two portions; 1 portion is for basic insurance coverage (i.e death, accident) and second portion is for savings. One of the main advantages of having an Education plan is that, if anything happens (i.e death or total permanent disability) to the depositor, the insurance company will continue paying for the monthly installment until the maturity period. You may start as low as RM100 monthly and this amount can be added up on yearly basis. On top of that, you may add additional insurance coverage (i.e medical card) for your kids.

2.      SSPN (National Education Savings Scheme)
Starting 2007, anyone who wish to apply for PTPTN loan will need to have SSPN account. We may wonder, why we need to apply PTPTN loan when they charge 1%(currently) on the total loan repayment. The answer would always be because the uncertainties of the future. We may or may not need to apply for PTPTN loan, but who knows. SSPN provides dividens on yearly basis on average of 4%. It may not be a lot, but as the saying goes “ Sikit-sikit, lama- lama jadi bukit”

3.      Amanah Saham Didik
Eligibility for ASD starts from 6 months old. Initial investment is at RM100 and so far there is no limit of total investment. Average dividend payout is 7% (so far). ASD is a growth fund which invests in diversified portfolios but mainly in equity. Its an option if you want a long term investment with low-risk profile. 

4.      Unit Trust
Unit Trust is another form for long term investment. One may ask, can a kid below 18 years old invest in Unit Trust? The answer is literally yes. When you decided to invest in Unit Trust, the primary account holder will be the parent, and the joint account holder shall be named after your kid. There are a number of funds you can choose for investment. IMHO, for education fund its better to choose between low & medium risk funds. After all its your child(ren) education fund.

5.      Tabung Haji
As low as RM2, you can open Tabung Haji account. This is open for Muslim and if your account reaches RM1,300 you can register for Hajj. So besides saving for child’s education, you are preparing some funds for them to perform Hajj. Tabung Haji invested in diversified short & long term portfolios which comply with Islamic ruling. Besides that, TH also invested in their own subsidiaries which focusing on services, plantation, construction and properties. Their dividend payout is averaging at 5%.

These are ONLY some of the ways that you can actually invest/save for your child education in the future. But my recommendations are
i.        Diversify your investment. Maybe you deposit some in Education Plan, Tabung Haji etc. Maybe duit raya/gift you save up in SSPN or ASD. The choices are yours.
ii.      Frequent deposits. To ensure you get the target fund, investment need to be done as frequent as possible. The most would be on monthly basis.

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