Saving up for your baby’s future? How about ‘saving’ via property?

A colleague asked me about advice on some education savings fund. I told him, honestly, whatever fund you intend to start saving for your new baby’s education, it should be complemented by a property strategy. Then, I asked him, how much do you think is enough for an education fund? He said if overseas, half a million should be the minimum by the time the fund is needed. Assuming it’s RM500,000 how much would you need to save monthly for the next 18 years? Well, RM500 per month is definitely not enough. RM1,000? Assuming inflation does not kill everything that the fund gives you as dividend, well, perhaps you may hit RM500,000 by the end of 18 years. Savings is a very good way to achieve your financial goal and it is also quite safe and low risk too. Once you do the calculation, you would note that saving RM1,000 can indeed give you RM500,000 easily in 18 years. However, I asked him to also consider buying a property instead as a hedge as well as a form of ‘savings’ for his current baby and perhaps babies in the future.

Okay, coming back to education funds, well, it may not necessary be for education. If your kid is really an amazing student, more often than not, a scholarship awaits. Or else, play sports, get into national team and scholarship awaits too. My sister got quite a good deal because she was a state player for softball. Okay, if your kid is not the top end ones, then it is ok to get just a degree. These days, there are many colleges or universities that you can enrol your children into and even if it is one of those dual award ones, one degree by the local university college and another one from the overseas university, the total cost would not reach RM100,000 for a 3 year course. In fact, the last I heard, it’s just RM60,000. During my time, it was just RM35,000. So, should you not save? Please, you must save but a property strategy can also be done in tandem.

Get a property which you can rent out easily. Even if the mortgage could just barely cover the rental. Note that if property prices do not rise, the rental would soon give you great returns based on your capital investment. If however the property prices rise a lot and your rental return is bad in terms of %, it’s even better right? Sell your property and repeat the process. What if you can’t rent out your property? Well, today if you still buy a property that could not be rented out, I think the ‘wrong’ is on you. Go online, search the ones which can be rented FIRST. Then only look at the current prices. If it’s secondary, more often that not, you can still find. For new ones, sorry, the prices have gone way too high for any rental to be self-sufficient. As for capital appreciation, considering that your property price is just RM300,000, a 2% up every year is still RM6,000 per year! This is already RM500 / month.  Remember your savings in the first paragraph? 🙂

written on 11 Nov 2014

Next suggested article: 53% of Gen-Y owns a property……. in Australia.

5 thoughts on “Saving up for your baby’s future? How about ‘saving’ via property?

  1. Nowadays, there are many oversea University branch being setup in Malaysia. I am glad that the trend is moving toward to this direction, thanks to new business model and technology to make this come true mainly due to high operation cost and others, in fact, we have many alternate choices as compare to previous in term of education and business. world is changing.

    I wonder that why would we spend so much of money by going abroad for the education or degree? is it really worth taking such of burden with study loan from bank or headache in long term saving plan for those who barely afford that unless monetary is not the problem for the family ^_^ , that is the difference case, you may have as many as or long term study in oversea as you wish.

    You may not agree with me as everyone has their own expectation or goal to achieve, every parent loves their kid and always giving the best for their children, but one need to evaluate and think objectively from financial standpoint, what really need to achieve to pursue an education abroad and the value of education unless the course you want to pursue is unavailable in Malaysia. that is considered exceptional. if you have an option, what is yours? local or oversea?

    You may also argue, studying oversea may get oversea exposure or make one smarter than others in local. if yes, then you may ignore my comment here. Alternatively, there are many way to get oversea exposure or experience, one common way is travelling.

    Lastly, education is also type of business, my view : )

  2. I have 0 confidence in malaysian education system. By studying abroad, one of the biggest plus is to be able to find a job there and just stay there. Imagine if your child aspire to become an investment banker working in new york, do you think a degree in U*M is enough?

    • All the best then wee wei. I am sure you will make it in new York. I will remain in Malaysia. I believe I have better opportunity here. As for university, if you enter a good university overseas, great. If just those low ranked ones, I have no comments. Remember there are thousands of universities there. Cheers.

  3. Hi wei wei,

    Please don’t forget,There many talents work in oversea (Singapore, China, UK, US and all over places)are highly contributed and famous, they are originated from Malaysia education system through Primary, secondary and some even from local U. Not everyone are rich and have a chance to study abroad. To those lucky they may got scholarship, if our education system is poor as you think, so, why they are so many talents come from the country, what i want to eleborate my point is.. success consists in many factors, education is just very minor one of those. Education is not equal point to be success, i do not mean of asking you to refuse the education, instead, you should find the balance point and the right track objectively for every individual instead of following it blindly.
    Lastly, i foresee asia will be a good place for high economic growth in 21 century especially with China, mandarin will be the most important language by then. why we want to leave as we are in the right track, do remember world is changing dynamically, there is no right and wrong, people should appreciate what we have now, it doesn’t mean oversea moon is always big and round. Anyway, the decision is yours, no one is able to stop you but yourself.This comment is solely from my view and no offend to anyone.

  4. you know.. just to sidetrack a bit.. i was at a dinner party with some atas friends a couple of weekends ago. ( not that i am) well, the conversation changed from business and property to education… then some bozo decided to share that his kid is starting school at preschool level at marlborough college nusajaya… to the tune of about rm5000 a month.

    i was skeptical at first but when i went home, i actually went online to check half expecting it just all hot air… but lo and behold…. pre school starts from rm62k…. all the way to pre-U i believe… at a cool rm100k+ for a year. i’m not sure when they started admissions, but it seems that they already have about 700 students currently. its mind boggling… until i looked around and saw the number of private school mushrooming up around JB like crazy. too many to count.

    i’m married still trying for kids, but i’m just wondering.. is this a foreboding of things to come? even for national/government schools, i been hearing parents sending their kids to tuition classes for a few Ks every month… so then again, rm5k isnt that much, if you are getting a more holistic education.

    u know, there could a time coming when singaporeans would actually send their kids to JB’s many international private shool… or they could already be doing it.

    P.S: wei wei…. like many i chose to stay on in Malaysia. i love this place, actually many overseas places are much much better, but if you got the resources, it could be nice everywhere. i studied in sg from young, did my pre-u in KL, went to australia, graduated worked for a few years, but came back due to family reasons. i would say i’m lucky because quite literally all the talent has left for singapore, and thus i guess its easier for me to shine.. lol. so. to each his own, and Malaysia is a great place, you just need to look in the right places. cheers!

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