Saving for Education.

AuteurDonnellon, Brian
Fonction Expat pages: financial column

Saving to fund your children's education means you must accumulate the right amount of assets for a time many years in the future. This is a huge challenge and requires planning, discipline and periodical adjustment due to the rising cost of education.

Currently, semester and living costs for four years at a private university in Switzerland can cost in excess of SFr 100,000. We recommended that you prepare a plan and budget but remain realistic, because you cannot save more than you can afford. Scholarships and student loans will hopefully still exist in the future to cover any shortfall.

Personal investment strategy

If you wish to personally manage your money, you will need to decide upon a strategy. For example, carefully select and invest in a number of stocks until your child's eighth birthday; then, between the ages of eight and fourteen invest new money in a mix of stocks and bonds, before finally from age fourteen onwards, protecting the savings by choosing a more defensive strategy for the entire portfolio.

Many parents are overwhelmed by the thought of managing money and prefer to use a custom-made solution. Let's explore some of those possibilities in Switzerland:

Life insurance solutions

Life insurance policies are often used to finance a college education, although, due to the high costs, many investment experts argue this is not the best method. This is because the net return is often poor when compared to bank solutions. Life insurance, nevertheless, has certain advantages, such as:

--A regular savings commitment, enabling the saver to reach their goal

--A guaranteed savings target

--Disability cover is often optional

--A premium waiver can be included in the event of disability or death of the person financing the premium. (for example, grandparents)

Here are examples of two insurers who market their solutions aimed at saving for further education:

--Allianz Insurance Company--fund linked insurance for children: This solution, provided by one of the world's largest insurers, offers the possibility of beginning the insurance and savings plan even prior to the birth of the child. The investment funds can be switched during the policy duration to alter the strategy. The policy is financed periodically and the value of the funds will be paid out at the end of the agreed period. The value of the fund is paid out at the end of the term, which can be chosen anytime between the child's 16th and 30th birthday.

--PAX Insurance...

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