Parents, I have discussed earlier the importance of inculcating financial educating from their early childhood and for you to oversee on their investment early in life. I have done a projection on the value of my child’s assets 20 years from now, with the assumption of a modest return. Let us take a look at the figures and ponder if it even suffice future plans.
Regular Savings Plan – POEMS ShareBuilderPlan (SBP)
| Value | Remarks | |
| Today | $2,858 | |
| Age 21 | $148,700 | Assume 3% i/r p.a. $500/month contribution for 20 years ($120,000) |
Endownment plan
| Value | Remarks | |
| Age 21 | $53,689 | Assuming Guaranteed portion plus 50% Non-guaranteed portion is met |
CPF Balances
| OA | SA | MA | CDA | Total | |
| Today | $0 | $300 | $4,085 | $9,904 | $14,289 |
| Age 21 | $0 | $38,685 | $10,415 | $14,756 | $63,856 |
Total assets
| Asset value | |
| Liquid | $202,389 |
| Illiquid | $63,856 |
| Total | $266,245 |
While the amount look substantial for a 21-year old, is this actually enough savings/investments?
Cost of university education for Undergraduates
The biggest cost factor in the lifetime of a child from baby to adulthood is probably her university education. While some people advocate on having their children earn their tuition fees before they embarked on their journey, personally I view it from the perspective of a dad that this is the last gift I can give before the child begins life in the workforce and stands on her own feet.
National University of Singapore (NUS) tuition fees mostly range from $8,200 to $9,600 per year. Nanyang Technological University (NTU) tuition fees mostly cost $8,200 to $9,400 per year. Singapore Management University (SMU) tuition fees mostly cost $11,450 per year.
Historically, tuition fees increase by $50 to $100 per annum, except for some courses which may rise sharply in some years. Students pay fixed fees based on their cohort throughout their course. For bank loans, interest accrual and repayment only begins after graduation. For CPF education scheme, although repayment only begins after graduation, interest accrual actually begins from point of annual disbursement.
| NUS | NTU | SMU | |
| Today (3 year course) | $24,600 to $28,800 | $24,600 to $28,200 | $34,350 |
| Age 21 (3 year course) | $30,600 to $34,800 | $30,600 to $34,200 | $40,350 |
| Age 21 (4 year course) | $40,800 to $46,400 | $40,800 to $45,600 | $53,800 |
We can see that the maturity payout for the endownment plan (projected $53,689) will serve its purpose for a local university education.
What if an overseas university education is preferred?
The above is in today’s dollars. Not factoring inflation yet, the liquid assets of $202,389 that we projected is insufficient for the popular destinations of the United States, United Kingdom or even Australia. However, it still does go a long way in helping to subsidise her education while she takes out an education loan on the remaining.
This is also the point at which I may hand over the reins of stocks and shares in her name to manage, the choice to liquidate or invest is entirely in her hands and she will have to manage the trade-off between investment, expenses and savings from young.
Parents, if you think that I had done exceptionally well so far, you have thought wrong. While it is good planning, it meets yet falls short of expectations. This is the reason why you too have to start early and consider other bigger costs so that you do not have to scramble and borrow money when the time comes.
Theory of Constraints 
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