[Finance Wiz @Daniel] Guide to children’s education funds for securing your child’s future

2024-01-29

5 Mins Read

In a society that prioritises ‘giving children a head start’, nurturing kids from an early age has become essential for parents aspiring to cultivate future talents. Understandably, parents grapple with both mental and financial pressures. The key is to employ effective financial management tools to establish children’s education funds, ensuring comprehensive support for every stage of their growth. In this article, I will share some astute financial management strategies.

Why children’s education funds are crucial for the 30+ group?

The escalating education costs annually exert financial strain on parents contemplating sending their children abroad for studies. To guarantee a quality education, parents must establish clear savings goals and effective plans. Early education fund planning not only helps manage educational expenses, alleviating financial stress but also provides children with the freedom to concentrate on their studies and broader developmental opportunities.

Recent reports suggest the Hong Kong government's contemplation of university tuition fee adjustments even for those studying in Hong Kong. Hence, the rising cost of education is a trend that cannot be escaped, irrespective of the study location.

Children’s education fund guide

Tip 1: Set clear savings goals

Understand your desired educational level for your children, considering degrees and majors. Assess financial needs, including tuition fees and living expenses. Determine a specific monetary target with a clear timetable based on your children’s future age.

Tip 2: Diverse allocations to spread risks

Opt for diversification and risk spreading in financial strategies. Besides time deposits, involve a reliable financial management team to plan mid- to long-term savings insurance plans. Diversify investments in high-quality assets such as government bonds, corporate bonds, listed equities, as well as private equities that require a high entry threshold. In this manner, even if one asset class experiences a setback, other asset classes may stay steady and serve as a complementary factor.

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Tip 3: Cope with inflation, preserve and increase value

Inflation significantly affects the expense of education. When determining a target amount, it's crucial to consider inflation to ensure that funds can contend with future price rises. Parents can select certain saving insurance products with features focusing on value preservation and appreciation. For instance, specific endowment insurance products offer a policy value lock-in option, aiding in addressing the challenge of inflation while simultaneously achieving asset appreciation.

Tip 4: Make good use of the power of time

The children's education fund is a medium to long-term investment; leverage the compound interest effect by starting early. Despite a relatively small initial investment cost, it can accumulate better returns over time. You can eventually amass improved returns, offering robust support for the future of your children and even grandchildren, even if the initial investment amount is relatively modest.

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Tip 5: Flexible response and continuous adjustment

In addition to the educational goals of children, which may evolve as they mature, the family's circumstances, encompassing alterations in income, expenditures, family members, and so forth, all present opportunities to influence savings objectives. It is advisable to routinely assess and adapt savings goals and budgets, ensuring that the plan aligns with current needs.

Product features of AXA's ‘FortuneXtra Savings Plan’

The children's education fund goes beyond addressing current educational expenses; it’s about securing long-term goals for a child’s future. This includes funding for college education, vocational training, and even endeavours like starting a business or buying a home. By initiating savings and financial planning early on, you can guarantee that your children will possess ample funds to underpin their aspirations and objectives upon reaching adulthood.

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‘Finance Wiz @Daniel’ not only delves into children's education funds through this column but also provides tips on comprehensive financial management. Covering investment strategies, risk management, understanding financial markets, and more, I aim to help everyone master financial knowledge and adeptly navigate various financial challenges.

Watch the clip and learn more about the tips on comprehensive financial management.

^#Source: https://www.ef.com.hk/further-study/cost/

All of the product contents mentioned above are subject to terms and conditions. For detailed information on the terms and conditions, as well as exclusions, please refer to the relevant product brochure and policy contract.

The above content is reviewed by Mr Daniel Lau - Head of Wealth Management Training of AXA Hong Kong and Macau.

No warranty or responsibility is assumed by AXA Hong Kong and our related or holding companies regarding non-infringement, security, accuracy, completeness, adequacy, reasonableness, fitness for a purpose or free from computer viruses in connection with the information and materials provided. AXA Hong Kong and our related companies and holding companies do not accept any liability for any loss, damage, cost or other expense, whether wholly or partially, directly or indirectly, arising from any error, inaccuracy or omission of the information and materials to the extent that such liability is not excluded by law.