Who among us young parents’ doest give much attention to the rising cost of education. During my college years at Mapua Institute of Technology, my tuition fee was only 1,500 pesos per semester that was about 23 years ago. What was about my tuition was that it did not increase until I finished my civil engineering course. Assuming that the tuition today in the same school is 150,000 pesos per year that would mean an average increase of 19% per year was applied. Don’t you think it’s about time you take a look on your children’s college education program?

 Carl, a young businessman and his wife were discussing with me on how they can prepare a good program for the college education of their 2 children.

 Here is the scenario:

Alex, their  eldest daughter is 6 yrs old and will be on her 1^st year college when she reached 16 will be sent to a 5-year engineering course in Manila and their assumed tuition per semester is 50,000 pesos. Their available saving now is only 100,000 pesos which they currently placed in the bank earns only 3% per annum less 20% withholding tax.

Their predicament is to leave their money in the bank or invest them somewhere, so that they can use it by the time Alex starts 1^st year college.

 Jill, the loving wife just gave birth to a new baby girl named Andy wanted also to do an education planning for her young daughter. She plans to set aside 5000 pesos per month from her salary for Andy and she wants to know how to go about on their children’s total college education fund.

The Analysis:

 The cost of College education for Alex is 1,583,505 pesos, and her available budget is 100,000 pesos.

 If Carl leaves the money in the bank that earns 3% per annum, his 100,000 will grow only up to 134,391 pesos in 10 years, and the bank deducts them 20% withholding tax from the interest, this leaves them a net fund of 127,513 pesos only.

 It will take Carl to look for a guaranteed investment that gives 32% per year for his 100,000 pesos to reach 1,583,505 pesos which he believes is impossible.

Possible solution he can do is to save a regular fund of 9662.63 placed at 6% return for the rest of 10yrs so that they can build a fund of 1,583,505 for Alex.

 The cost of college education for Andy is 2,805,276.96 but Jill can only save up to 5,000 pesos per month for 16 years.

If placed in the bank at an interest of 3% per annum, the fund grows to a maximum of 1,230,213 only

If placed in other facility which earns 6% per annum, the fund for Andy will reach 1,605,416 which are still beyond the 2.8Million education requirement. It will take Jill to find 13% per annum interest to reach 2.8 Million at 5000 monthly savings for 16 years.

 Please note that the analysis does not include the cost of allowances, boarding house and food during their college years.

 This education requirement continues to grow and even surpass the inflation rate. Would you be more happy to try helping out our children to be good in their studies so that they can be scholars and free ourselves from the burden of future financial liabilities at stake on our children’s’ education?

 The way we plan any of our financial objective will always be dependent on several factor like time, initial investment, choice of investment facility, the rate of return of your investment. It is likewise advised that each financial goal should be treated and planned separately so as the budget allocation.

 For comments and suggestions, you can email info@grand-holdings.com of visit my website at www.grand-holdings.com

 Two best friends Marvin and Ryan, were on a race to accumulate as much money as they can with a goal of using them after 10 years, here is the result of their investment choices.

 Marvin, moderate investor will start saving 10,000 per month for 10 years and thought of placing them in a Managed Fund (Bond & Equities) with a projected average return of 8% per annum.

 Ryan, a reluctant investor tends to watch the situation for the first 5years, so he decided to postpone saving. On the 6^th year, he starts investing 20,000 per month up to the 10^th year and also decided to place them in a Managed Fund with a projected return of 8% per annum.

Who gets higher return after 10 years?

 Marvin with just a regular saving of 10,000 per month for 120 months made an accumulation of Ph 1,829,260.00 which he can withdraw at age 50. He gets more after 10 years.

 Ryan who started investing after 5 years or 60 months but placed 20,000 monthly which is higher than the regular savings of Marvin, made only a total of Ph 1,469,537.00 at age 40. He made a similar investment capital of 120,000 pesos.

 But who gets more money at age 55?

 At age 50, assuming Marvin stopped investing 10,000 monthly but allowed his money to accumulate up to age 55, but this time he placed them in a more secured investment facility thru government securities at an assumed rate of 6 % per year, his money will reach up to 2,448,230 pesos.

 At age 40, Ryan decided not to withdraw his money also and placed them also in long term bonds at 6% per annum; his money will be realized at 3,521,830 pesos.

 Hence, Ryan being younger and who invested at earlier age has more money to spend at age 55.

 This tells us that “time” plays a vital component in the accumulation of fund. Many of us tend to procrastinate just how Ryan has chosen to do. Time is significant in investing as it maximizes the return of your money.

Apparently, time is more valuable than money. The way we spent our time in investing may be similar to the way we use it on other things that matters to us. While we have a lot of opportunities to create money, we must always realize that the time spent a minute ago is gone and will never come back. When we embrace our time as an important and limited item for wise consumption, and all our actions as investment, it will indisputably change the way we make and value our choices.

 While time should be invested wisely to attain a balance and fruitful results in our lives, same goes on our financial planning where great profits always go along with the proper use of time.

 For comments, suggestions and inquiries please email info@grand-holdings.com