College Fund para sa 1 year old child

College Fund para sa 1 year old child

Let’s start with a father who wants to prepare for his 1year old child a college education fund. He texted me and His message goes like thi:

“Good day Aye!

I’m Atty. Jude Wayne (not his real name of course), 35 years old, a private law practitioner here in Lucena.

I’ve recieve your regular message on my mobile phone “Education is not a choice, It’s a Must“. Actually I am planning to get a college education fund for my 1 year old baby girl. I already have the proposal but when I saw the computation, I was very disappointed because the value of the plan after 25 years is almost the same as my payment for 5 years.

So when I search about Best Educational Plans in the Philippines, I’ve read an article from one of the financial advisor. I’m convinced that it’s really important to save for the future of our children. My wife and I can pay Php5,000.00 monthly. I also want the insurance with investment plan – intended for my daughter education.”

Other info given:

·    Wifey is 35 years old (Public School Teacher, Position is Teacher III)

·    Baby Daughter is 1 year old

(Wow, napakabait na magulang,hehehe  )

Hi Atty.,

First of all, thanks for the message. Your case is one easy task if you ask me. Why? Both of you are working and you don’t have a target school that would greatly affect our educational planning.

And you already have a target budget so the only thing that’s left for me to do is to project how much will the future value.

Since you have a daughter, it’s obvious hehe, because its his main concern, hehehe, that we’ll divide for your daughter and your wife. So that’s Php 5,000 a monthly savings for your daughter’s education.

You forgot to mention if you and your wife already have insurance. Let’s just assume you both have.

Let’s start with the plan. His daughter the same age as my daughter Candice. hehehe. (commercial lang po  )

• Solution 1 (Pure Investment) – At Php 5,000 a month and if you will religiously start every month till he turns 18 (time she’ll start college), the total amount that you will save for will amount to Php 1,020,000. And if you will invest it in mutual funds at PAMI Strategic Growth Fund and the fund performs an average of 8-10% yearly return, that will amount to Php2Million – Php 2.4Million in pure investments.

However, if you don’t have insurance yet, another approach will be getting a term insurance and investing the difference in mutual funds.

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• Soulution 2 (Term Insurance + Mutual Funds) – Idea here is you don’t have Life Insurance yet. (I won’t elaborate here why you’ll need insurance) Say you get 1 Million coverage Term Insurance for you. That would be around Php 6,000plus a year or P500 per month leaving us with Php 4,500.00 to invest.P4,500 a month for 17 years will give us Php 1.8 Million – Php 2.1Million by the time he reaches college. With that amount, we can easily get Php 200k each year for 4 years.

Note: Solution 2 is Good! Only and only if you will have the self discipline to invest regularly, religiously, strictly   without any skip. However, based on experience, only 2 out of 10 people can successfully do it. If you cannot, solution 3 might be the easiest way.

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• Solution 3 (Insurance with Investments or aptly called Unit Linked Plan or ULP) –  Using Philam Life Family Secure, Php 5,000 monthly will give us an insurance coverage of Php 5.1 Million or 86x of 60,000 annual premium. By the time that his daughter reaches college – PAMI Strategic Growth Fund value will range from Php 1.2 Million (8%) to Php 2 Million (10%).

Note: Solution 3 is for those who can easily pay bills rather than save on their own. And based on experience, a lot of people are better off with this method since psychologically, they are obliged to pay when bills come on a regular basis rather than self induced savings (sariling sikap ika nga).

I could’ve also tried checking the other one – Philam Life Money Works – insurance coverage with investments fund that allows you to achieve your dreams faster, you can also use for your child’s education. It is a plan with limited paying period 5yers,10years or regular paying plan. However, using the budget given by Atty. Jude, the minimum he will need is closed to minimum investment required per month payment in 5 years’ time in Money Works minimum annual budget for this plan is Php 70,000 annually, that is why he will need Php 6,000 monthly. At that rate (8% - 10% yearly), PAMI Strategic Growth Fund value will range from Php 942K – Php 1.2Million in 17 years.

So that’s it. We can then easily compare which one will give us a better return on your money. Now, it’s only a matter of choosing which one will actually work for you.

Sabi nge eh, ‘The choice is yours!
Atty. Jude, I hope I made it easier for you. The only task you have for now is choosing which solution works best for you and the most important thing?

Start planning your daughter’s education Now! Sabi nga ni Ms. Universe Arriela Arida “Education is the better key to success” (Nanood ka ba, hehehe . No need to wait tomorrow or next year. Kaya ang tanong ko ulit. Anong plano mo? Usap tayo. 

Frederick B. Ferrer, Philam Life Financial Advisor for 14years. Contact No. 09328564864 / 09196109348, email: frederick-b.ferrer@philamlife.com.ph