Save $600 a month?

Dear Mr Tan

Thank you for posting the FAQ on Save for Your Child's Education.

The projected amount of $52,000 is not adequate. My insurance adviser told me that a good university education can cost more than $200,000 in today's money. With inflation, it will be higher in 18 year's time.

What do you think?

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REPLY:

The insurance adviser wants you to buy a very big policy. To accumulate $200,000, you have to save $600 a month, or more. When you buy an endowment policy, maybe 12 to 18 months of your savings is taken to pay the sales charges, including commission to the agent. The total cost can be $7,000 to $10,000. That's a lot of money.

If you can afford to save more, that's fine. Choose a flexible plan that have low charges. This ensure that most of your savings goes to your child, and not taken away as sales charges.