Step-by-step guide to funding your child’s education
For most parents, on taking home their ‘bundle of joy’, the furthest thing from their minds, is their child’s tertiary education and the costs associated with it. Client Relationship Officer at JMMB Investments, Calvin Blackellar notes that although there is no perfect time to begin planning for your child’s tertiary education, starting as early as possible is the best way to ensure you are prepared financially and avoid the common pitfalls. Having a step-by-step plan is the best way to ensure that, you are able to finance your child’s education without sacrificing financial planning for your own future.
STEP-BY-STEP PLAN TOWARDS YOUR CHILD’S EDUCATION
Identify your target amount:
Parents can seek to forecast the costs associated with sending their child to university/college by using current costs as a guide and factoring in inflationary increases. Costs should include: tuition for the desired programmes of study (whether at a local or overseas institution), accommodation, food, transportation, books and other miscellaneous fees. A financial expert can assist parents to better project the future costs and work alongside parents to plan accordingly for their child’s education. Blackellar outlines that parents should seek to establish the total cost of the entire programme, not just for the first year, to ensure that they are adequately prepared.
Choosing the best education plan:
For parents who intend for their children to pursue tertiary studies overseas, he notes that a foreign currency account, such as the JMMB Graduate (US$) may be best; as it allows the parents to protect their funds from any depreciation of J$, while easily tracking the progress by investing in the target currency, e.g. target amount of US$50,000, In pointing to the performance of the JMMB Graduate, he shared, “although past performance is not a guarantee of future performance, the JMMB Graduate (J$) over the 12-month period, September 2016-2017, gave investors a return of between 7.82% and 15.27%, based on their risk tolerance.”*
Parents can get started now, with the JMMB Graduate investment plan offered in both Jamaican dollars and US dollars. The minimum amount to open this account is J$100,000 or US$1,000 respectively.
Blackellar notes, “The starting point should not deter parents, as JMMB provides customised and flexible plans to assist parents who may not be able to afford the opening balance for the JMMB Graduate, at this time.” To get started arents/guardians would need to submit: a valid form of identification, taxpayer registration number (TRN), proof of address and the names and contact information of two references. If a minor is added to the account, his/her birth certificate would need to be presented.
Consistency is key:
The Jamaican proverb, “one one coco full basket”, best describes the approach that parents should take to financing their child’s education. Blackellar states, “Although there is no minimum monthly investment required, consistently adding funds, irrespective of how small the amount, to your JMMB Graduate will ensure that you stay on track with reaching the target amount.” To facilitate the process of consistently investing, the JMMB financial expert recommends putting a standing order in place, or making investments via online banking. He adds, “It is equally important to limit access to these funds for short-term goals.”
NEVER TOO LATE TO PLAN FOR YOUR CHILD’S EDUCATION
While it is best to start planning for your child’s education earlier, it is never too late to begin planning. Blackeller shared that parents who have less than five years to plan for their child’s education should explore the options available including a combination of loans and investments and/or grants/scholarships and low or no-interest payment plans that may be offered by the school.” With less time in hand to plan, parents would also need to invest more in order to meet the target amount and should discuss a range of investment opportunities with their financial advisor.
Recognising that the shortfall may need to be met with a loan, Blackellar advised that a secured loan or the JMMB Graduate loan are good options. He cautioned against higher interest loans such as credit cards, as without careful management and quick repayment, the debt could become unmanageable.
KEEP TRACK OF YOUR PROGRESS
Like any other investment, careful tracking of its performance is important. As such, JMMB offers statements, for the JMMB Graduate investment plan, so that parents can have a “progress report”. This allows investors to manage their own expectations and make the necessary adjustments over time, in order to ensure that they are adequately prepared.
If ensuring that your child can achieve his/her dream is high on your agenda. Getting started early will ensure that you secure your child’s future, while balancing your own goals.
*This return is based on no withdrawals being made from the JMMB Graduate investment plan.