WILSON
YOUR CHILD has decided to study overseas and after having submitted a convincing claim, you evaluate your circumstances and decide to go ahead with the necessary arrangements. Undoubtedly the number one concern in taking on this venture is how you will be able to provide financial support without depleting your savings to an uncomfortable level.
Before you do go full speed ahead with these arrangements, it is important to consider that the cost of obtaining a degree continues to increase worldwide. In addition to the tuition, take into account inflation, which may inevitably cause a significant increase in the already rising costs of accommodation, utilities, books, equipment, lifestyle expenses, and travel costs to and from home.
With these factors in mind, consider other sources of financial support first. There are usually scholarships available at the particular university and the country's embassy as well through our Government. Many local institutions also offer loans at fairly decent rates. (See The Gleaner's recently published scholarship guide).
Although it seems as though there are several financial barriers, you can help to remove them with proper investing. Adjust your budget to still include a normal saving scheme as well as one designed to cover these new expenses. Determine the frequency at which you will need to make payments, and then create an account with a maturity date in sync with those payments. For example, typically investment periods run on a 30, 60, 90, 180 and 365-day basis, if tuition is to be paid per semester, then you could create an account that matures on a three-month roll over basis. Longer maturity periods attract higher rates of interest. A fixed income-based unit trust account for example, will not only secure a higher rate of return against falling interest rates, but early encashment penalties will also help to deter frequent withdrawals for other purposes.
EASILY ACCESSIBLE
In addition, it is wise to create an account where the funds will be easily accessible; this is in the event that you may need to send emergency money. An institution that offers a wire transfer as service would be desirable, this allows for same-day delivery at a reasonable cost.
Invest in the stock market for excellent long-term, tax-free returns. The portion of your savings not geared towards funding your child's overseas tuition may be placed in this type of investment. The stock market does not offer guaranteed returns, especially in the short run.
Typically, investing in Jamaican dollars is a good idea as the devaluation in the dollar is not enough to offset the differential in earnings between investing in Jamaican versus U.S. dollars. However, in this situation where there is a constant need to purchase that foreign currency, it becomes a better choice to simply invest in that currency.
The key here, as with investing for any purpose, is to stay organised, committed and consistent with saving, and to keep abreast of all investment options available to you. Revisit the plan occasionally to monitor progress, and speak with an adviser to evaluate your personal circumstance, so that they may assist you in developing the contingency plan that will work best for you.
Stacy-Ann Wilson is a relationship officer at DB&G's Kingston branch. She may be contacted at 1-888-CALL-DBG or via email at info@mydbg.com.
