Save for children's education

COMMENT IN MY BLOG:

If you are require some money after some years (e.g. 20 years later for children education) and insurance, it may not be good to buy a term plan and invest the rest as Mr Tan said.

At the 20th years, it may be a market down turn or the companies you bought are valued lowly by the market, and you are not able to get a decent returns - though the chances are low if the time is long.

With an endowment fund, all reversionary bonus declared in the past years are guranteed, your are more assured of a reasonable returns and assured cash after 20 years.

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MY REPLY:

If you save for your child's education in a large, well diversified, equity fund, you are able to withdraw the savings over a few years to fund the education expenses. This ensures that you get an average market return and is not affected by the market price at a specific maturity date.

You can enjoy the benefit of a higher long term return from the equity market. This return is likely to be much higher than an endowment plan. You also save on the high charges embedded in an endowment plan.

You also have the option to move to a bond fund closer to the maturity date, and avoid the fluctuation in the equity fund.