While there has been recently proposed changes for needs-based school funding, the changes would not necessarily make the cost of sending a child to private school any less expensive for many families. Preparing your child for success in their schooling and further education studies can be a significant financial burden, and the cost of a private education can easily reach $20,000 a year per child.
What can parents and families do to invest in education for one or more children successfully? Below, we’ve outlined the most popular education investment options available, along with their pros and cons so that you can have a better idea of which investment options may best meet the educational needs of your child or children.
Savings accounts or term deposits are an attractive option for saving for education because they are straightforward and easy to understand. You can quickly open and maintain one at your bank or credit union, and the rates are often attractive, especially if you lock in for a certain term.
The cons to savings accounts is that even if you lock in a term, the rates tend to be poor when compared to other investment options.
Managed funds are where you pool your funds with other investors in order to create a diversified portfolio across multiple sectors. Managed funds can produce attractive returns, but the con is that while the assets can rise, they can also fall, resulting in leads to the risk of loss. If you’re interested in a managed fund, they are best suited for long term investors who can ride out the swings in value.
Investment shares can be a wonderful way to reach educational savings goals for your kid. You can directly invest in the stock exchange as an individual, which gives you control over where you choose to put your money. The con is just like with managed funds; there is risk involved due to the rise and fall of the market.
Investment bonds are another great option for investing in education. Sometimes they are referred to as growth bonds or insurance bonds. They work similarly to a managed fund, but they also include some features of a life insurance policy. When it comes to taxes, this can be an effective savings strategy, but you do need to conform to certain contribution and withdrawal rules.
Education funds are purpose-built products which are marketed by some companies as a method to help you save for your child’s education. This option can seem great due to the positioning of funds, but you need to be careful of what you’re signing up for. Check for any additional associated fees, the contribution timeline, how and when to withdrawal and other rules associated with the fund.
Your child’s education is important – with these investment options, you can decide which method is right for you and your savings strategy. We are only a call away. Let The Farm Protectors, protect you and your family.