Sunday, July 28, 2013

Saving for children education

Just want to start off with two paragraphs of some vital statistics
Of the 41,573 public university enrolments this year, only 7,913 were Chinese Malaysians. Last year Chinese students made up 8,985 of a total enrolment of 38,549 and in 2011 around 9,457 of a total enrolment of 41,267, according to the Malaysian Chinese Association, or MCA, which is part of the Barisan coalition. 
http://www.universityworldnews.com/article.php?story=20130717110401762
Datuk Dr. Mohd Nor Dalimin, Malaysian Examinations Council chairman announced that a total 46,712 or 92.19 per cent had full passes for at least one subject in the Sijil Tinggi Persekolahan (STPM) 2011 compared to 46,795 (92.5 per cent) in 2010, 0.31 per cent drop. 12 candidates received the excellent A grade in five subjects taken compared to eight candidates in 2010. A total of 50,669 candidates had sat for the STPM last year.
http://www.yusufmustanir.com/2012/03/stpm-road-to-university.html

If you are a Chinese Malaysian, you should know that the chance of your child or children getting into public university is less than 20%. You should also know that you should get ready at least about RM 120 k per child down the road if you wish them to be able to study in a reputable local private college.

Tuition fees will cost you around RM 70 k for a 3 years course. The cost of living includes lodging, food, transportation, telecommunication, etc will easily cost you another RM 50 k/3 years.

For those of you who are young, let's say you have 19 years to prepare the RM 120 k How much do you need to put aside if you can generate 5% return per year? I use lower % return partly just to offset the inflation. To get 5% inflation adjusted return in a new normal investing environment, I must say you must be above average investors as well. But never mind, let's move on to the calculation.

If you start with RM 1 k in year 1, CAGR return of 5%, to save RM 120 k - you will need to set aside RM 3.58 k per year or roughly about RM 320/month per child.

For Chinese Malaysian parents, you should know that 80% chance of not able to secure a place in public university is not a good odd. Procrastinating will make matter worse unless you want to burden your child/children with loans hanging on their neck before they can earn. Basing on Malaysia per capita income of USD 10 k or roughly RM 31 k, you will need to set aside about 13% of income for future a child education.

Putting uncontrollable factors such as unfairness or free education for every child debates aside, let's get realistic and pragmatic -- control your destiny or someone will. It is this kind of spirit that makes the minority ethnic of this country to seek economic independence. It forces them to be far sighted and working a lot harder.

This is also precisely why the society disparity is getting wider - willingness to prepare financially will ensure their child/children get better education quality or better still if they are bright - Singapore and many other foreign countries will take them as their citizens.

1 comment:

venessa said...

hey there, i found this post very well written and extremely relevant to what many malaysian students are going through. I totally agree that we should put aside the unfairness some of us face in this country and instead put in effort to ensure we have sufficient funds to ensure a quality education for our kids. Keep up the good posts!