“Investment Planning for Children Education - What

strategies should we adopt?”

Group Members:Ilham binti Samsuddin @ Yasin G0928688Nurul Jaliah binti Ramino Rashid G0924256Sabiqah binti Harithuddin G0927656Shazmin binti Shamsul Ariffin G0929658

Prepared For: Br. Asrul Dahari

What is the investment planning education for

Children?

Process of designing saving tools which later

provide an amount of money to fund child’s

higher education expenses

Why do we need child education investment

planning?Increase of higher education costs. Assist parents in making systematic financial

planning for their children’s higher education.Solution for financial problems faced by

parents and students, especially those with low incomes.

When the planning should start?

The plan should be started as early as the child is 6 months old

HOW?

5 Steps of Child Education Planning

Setting Target Date

Finding Current Cost of Education

Finding Target Amount

Estimating the returns you can generate

Calculating Monthly Contribution

What are the factors to consider?

Diploma?

Degree?

University?

Study local

or abroad

?

How long?Course

?

 How much coverage do

you need?

 

How much coverage do you need? (cont.)

The following are some of the factors you may need to consider in determining the level of coverage:

 

Current course fees

Expected living expense

s

Number of years of study

How much

its would

cost you today

FV = PV(1+Inflation)^n

How much coverage do you need? (cont.)

EXPECTED EXPENSES FOR CHILDREN EDUCATION

AGED 5 - 6 Years 7 - 12 Years 13 - 17 Years 18 - 19 Years 20 - 23 YearsMAIN EXPENSES :

TUISYEN FEES RM330.00 X 12 month X 2 years RM7,920.00 nil nil nil nilRM300.00 X 12 month X 1 years Nil RM3,600.00 RM3,600.00 nil nilSCHOOL FEES RM200.00 X 1 years Nil RM200.00 nil nil nilRM300.00 X 5 years Nil nil nil nil nilUNIVERSITY FEES Nil nil nil RM2,000.00 RM12,800.00

OTHER EXPENSES : TRANSPORTATION RM1,320.00 RM8,640.00 RM8,640.00 RM7,200.00 RM14,400.00SUPPLEMENTARY RM174.00 RM9,000.00 RM9,000.00 RM3,600.00 RM7,200.00LIVING EXPENSES RM4,800.00 RM12,000.00 RM12,000.00 RM4,800.00 RM9,600.00ENTERTAINMENT RM6,000.00 RM15,000.00 RM15,000.00 RM6,000.00 RM12,000.00

TOTAL EXPENSES : RM20,214.00 RM48,440.00 RM48,240.00 RM23,600.00 RM56,000.00

TOTAL 18 - 23 YEARS OLD RM79,600.00

COSTS AFTER INFLATION (2.77%) RM137,480.00

Child Education Contribution Calculator

             

                 

GoalCurrent

YearTarget

YearInflation Expected

Value in Todays Term

FutureValue

Years Left

Return Expected

Per month Investment

Child Education 2006 2026 2.77% 79,600 137480 20 9.00% 204

                 

   

  

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Where to Invest?

Investment-link Plan

Unit Trust Trust Account

Saving Account

PRUlink Dana UnggulPRUlink education plan For

Mr Darwish Aiman Bin Adam Sim & Madam Shazmin Binti Shamsul Ariffin

Illustration Of Child's Benefits

Year AgeTotal Premium Paid at the Beginning of the Policy Year (RM)

Total Premium Outlay (RM)

Total Death Benefit (RM) (PEP + PRUlink term)

Total Critical Illness Benefit (RM) (Crisis Shield + Crisis Cover

Benefit)

Total Cash Value (RM)

Projected Investment Return

(9%)

Projected Investment Return

(2%)

Projected Investment Return

(9%)

Projected Investment Return

(2%)

1 2 1,200 1,200 16,213 16,206 8,000 213 206

2 3 1,200 2,400 24,440 24,412 12,000 440 412

3 4 1,200 3,600 32,926 32,854 16,000 926 854

4 5 1,200 4,800 41,443 41,297 20,000 1,443 1,297

5 6 1,200 6,000 42,180 41,919 20,000 2,180 1,919

6 7 1,200 7,200 42,988 42,564 20,000 2,988 2,564

7 8 1,200 8,400 43,929 43,286 20,000 3,929 3,286

8 9 1,200 9,600 44,930 44,007 20,000 4,930 4,007

9 10 1,200 10,800 45,995 44,727 20,000 5,995 4,727

10 11 1,200 12,000 47,128 45,446 20,000 7,128 5,446

11 12 1,200 13,200 48,334 46,163 20,000 8,334 6,163

12 13 1,200 14,400 49,618 46,879 20,000 9,618 6,879

13 14 1,200 15,600 50,968 47,594 20,000 10,968 7,594

14 15 1,200 16,800 52,444 48,309 20,000 12,444 8,309

15 16 1,200 18,000 53,979 49,006 20,000 13,979 9,006

16 17 1,200 19,200 55,590 49,678 20,000 15,590 9,678

17 18 1,200 20,400 57,292 50,333 20,000 17,292 10,333

18 19 1,200 21,600 59,097 50,980 20,000 19,097 10,980

19 20 1,200 22,800 61,024 51,629 20,000 21,024 11,629

20 21 1,200 24,000 63,086 52,284 20,000 23,086 12,284

Year Age

Total Cash Value (RM)

Projected Investment Return (9%)

Projected Investment Return (2%)

18 19 19,097 10,980

19 20 21,024 11,629

20 21 23,086 12,284

Takafulink Cerdik Plan

Monthly contribution amount @ RM100

End of Certificate

YearAge

Non-Guaranteed ReturnProjected Investment Return:

(X% p.a)Projected Investment Return:

(Y% p.a)

Asset Manage-

ment Charge (RM)

Cash Value (RM)

Total Death Benefit (RM)

Asset Manage-

ment Charge (RM)

Cash Value (RM)

Total Death Benefit (RM)

18 19 101 12,375 32,375 175 18,450 38,45019 20 108 13,050 33,050 192 20,032 40,03220 21 114 13,754 33,754 211 21,729 41,729

Takafulink Cerdik PlanMonthly contribution amount @

RM150

End of Certificate

YearAge

Non-Guaranteed Return

Projected Investment Return: (X% p.a)

Projected Investment Return: (Y% p.a)

Asset Manage-

ment Charge (RM)

Cash Value (RM)

Total Death Benefit (RM)

Asset Manage-

ment Charge (RM)

Cash Value (RM)

Total Death Benefit (RM)

18 19 202 21,556 41,556 351 33,623 53,62319 20 214 22,848 42,848 386 36,700 56,70020 21 226 24,128 44,128 424 39,939 59,939

National Education Savings Scheme (SSPN)

SSPN is implemented by outsourcing whereby PTPTN appoints collection agents who act as deposit collectors. This means that deposits will be collected by collection agents, the majority of whom have comprehensive branches in throughout the country.

Source: http://www.ptptn.gov.my

SSPN (cont.)Saving Estimation for 17 Years from Various Deposit Amount

Note: Assuming 4% dividend throughout tenure

Amanah Saham Didik (ASD)

Fund InformationTYPE Growth

CATEGORY Equity

OBJECTIVE To provide investment opportunity that generates reasonable long-term growth & return

POTENTIAL INVESTOR

Parents who have children

ELIGIBILITY Children of 6 months old but less than 18 years old (Akaun Bijak)

PRICE PER UNIT RM 1.00

FORM OF INVESTMENT

•Investment Book•Member’s Investment Scheme (EPF)

MINIMUM INITIAL INVESTMENT

Investment Book – 100 Units

MAXIMUM INVESTMENT

Unlimited

FINANCIAL YEAR END

June 30th

ASD (Cont.)

Transaction Information

Fund Performance

ASD (Cont.)

Net Distribution per Unit (sen)

Year 2007 Year 2008 Year 2009

7.00 7.00 6.30

AmanahRaya Berhad Offer Trust Account Trust Account for child education plan

– Safecare Trust Significant of Trust Account:

◦ Protection for beneficieries◦ It does not constitute part of the distributable estate

under Faraid law (for Muslims) or the Distribution Act 1958 (for Non Muslims).

◦ The Donor may allocate a portion of the estate to be held in trust for a particular beneficiary for a particular purpose.

◦ They are legally constituted and cannot be challenged. ◦ It ensures the protection of beneficiaries especially

minors or persons with disabilities.

Advantages of Trust AccountsSpeedy and hassle-free Asset

DistributionProtection AssuredProfitable Investment

AmanahRaya Berhad

Tabung Haji

Calculations:Pmt = 600N = 20I = 5%FV = RM 18,210.61

0 1 20

Age 2 21

50 x 12 = RM600

Which investment planning should be adopted?

Choose shariah compliance investment instrument

Depends on your objectives and your risk tolerance

Ensure that the policy recommended is based on your needs and financial capacity Eg : agent carries out a fact-finding evaluation process

Choose policy that will allow you access to the funds when needed

THIS IS IMPORTANT!!!

Discipline your children to save money for future needs.