education savings plan, Education Savings
5 Simple Steps To Save & Invest For Your Child's Education in the UAE
College fees and associated costs are rapidly rising across the world and UAE is no exception.
In...
Investments, Education Savings
Investing in your child’s education is more than a financial goal; it’s a lifelong gift that empowers them to chase their dreams without limitations.
For parents in the UAE, this is a top priority, as education costs here rank among the highest globally.
Did you know?
- The UAE has the second-highest school fees globally (HSBC Study).
- Educating a child in the UAE can cost over AED 1 million (Khaleej Times).
If you are like me, keen to choose and invest in the Best Child Education Plan, then I would recommend the following steps
1. Decide Where Your Child Is Likely to Study
The first step is to identify where your child might pursue higher education. Common destinations for UAE parents include the UAE, the UK, Canada, and India. Each country has varying costs for tuition and living.
Here’s a snapshot of average annual education and living costs :
| Country | Tuition Fees (USD/year) | Living Expenses (USD/year) | Total Cost (USD/year) |
|---|---|---|---|
| UAE | $20,000 | $20,000 | $40,000 |
| USA | $35,000 | $15,000 | $50,000 |
| UK | $35,000 | $20,000 | $55,000 |
| Canada | $35,000 | $15,000 | $50,000 |
| India(Fees for NRI and Foreginers) | $12,000 | $8,000 | $20,000 |
Actionable Step:
Pick the country where you want to send your child for higher education and use that figure to calculate your savings goal. For instance, if your target is the UK and a four-year degree costs $220,000 today, adjust for inflation to project the future amount
2. Determine How Long You Have to Save
Time is money when it comes to investing in a child education savings plan. Let’s break it down into practical numbers:
If your child is 3 years old and will attend university at 18, you technically have 15 years. However, think of this in terms of pay cycles:
- 15 years = 180 monthly salaries.
Missing even one salary’s worth of savings can set you back, so start early and consistently.
Actionable Step:
Start an children's education plan with a monthly payment option and continue until the goal is achieved. own your target amount into achievable monthly contributions.
3. Account for Inflation
Inflation is like a hungry monster, constantly eating away our savings for breakfast, lunch and dinner. It can significantly increase education costs. For example, if inflation on UK tuition fees is 5% annually, the $220,000 cost today will rise to approximately $460,000 in 15 years.
| Rate of Return | Monthly Savings Needed for $460K (15 Years) |
|---|---|
| 5% | $2,150 |
| 7% | $1,900 |
| 9% | $1,700 |
Actionable Step:
Invest in education savings plans with high growth potential - Like Zurich Education Savings Plan
4. Start Investing Early
The earlier you start, the more time your money has to grow. Here’s how investments compound over time:
| Monthly Investment | Growth Rate | Time (Years) | Final Value (USD) |
|---|---|---|---|
| $1,000 | 9% | 5 | $75,273 |
| $1,000 | 9% | 10 | $191,088 |
| $1,000 | 9% | 15 | $369,284 |
Actionable Step:
Open an education savings plan today, even if you start small. Gradually increase contributions as your income grows.
5. Assess Your Risk Appetite
Your investment strategy depends on your risk tolerance and time horizon. In the UAE, you can choose from three primary types of plans:
- Capital protected with fixed and guaranteed bonus
- Capital protected with variable bonus
- Market-linked investments
Actionable Step:
Speak with a financial advisor to match your risk profile with the right plan. Review the terms and conditions thoroughly before committing.
6. Include Protection
Life is unpredictable, but your child’s education doesn’t have to be. Combine your investment with life and critical illness insurance to safeguard their future, no matter what happens.
Actionable Step:
Work with a financial advisor to bundle protection with your education savings plan.
- Term Insurance: Low-cost coverage with high payouts.
- Endowment plans : Combine savings with life insurance.
7. Seek Professional Advice
Navigating the financial landscape can be overwhelming. A qualified advisor can help you:
- Set realistic savings goals.
- Identify the best investment opportunities.
- Optimize your portfolio for growth and protection.
Actionable Step:
Schedule a free consultation with me, Damodhar Mata, to discuss your child’s education savings goals and explore personalized solutions.
Final Thoughts
Your child’s education is one of the most significant investments you’ll make. With the right plan, consistent effort, and professional guidance, you can secure their future without compromising your financial well-being.
