HOW MUCH MUST YOU SET ASIDE FOR YOUR CHILD'S EDUCATION?

The computer generated chart below indicates the amount per month which a parent must invest at 10% per year in order to have $40,000 available for a child's education when he or she reaches 18.

CHILD'S AGE…………$/MONTH REQUIRED……….TOTAL COST TO YOU

(at start)…………………….(10% RETURN)……………….($/Mo x 12 x # yrs)

Birth………………………….$67……………………………….$14,500

1YR…………………………..$75……………………………….$15,300

2………………………………$85……………………………….$16,320

3………………………………$97……………………………….$17,460

4………………………………$110……………………………...$18,480

5………………………………$125………………………………$19,500

6………………………………$145………………………………$20,880

7………………………………$167………………………………$22,000

8………………………………$195………………………………$23,400

9………………………………$230………………………………$24,840

10………………………………$275………………………………$26,400

11………………………………$330………………………………$27,720

12………………………………$410………………………………$29,520

13………………………………$520………………………………$31,200

14………………………………$670………………………………$32,160

15……………………………..$1000………………………………$34,000

16……………………………..$1500………………………………$36,000

17……………………………..$3200………………………………$38,400

18 NOW YOU NEED A $40,000 LOAN !!!!!

Loans are cheapest to you when paid off in the minimum period of time.

Below are the figures for the repayment of a $40,000 loan at 7%.

# OF YEARS…………….LOAN PAYMENTS……………..TOTAL COST TO YOU

TO REPAY 40Gs………………(/Mo)……………………………($/Mo x 12 x # Yrs)

1……………………………..$3500……………………………..$42,000

2……………………………..$1800……………………………..$43,000

3……………………………..$1250……………………………..$45,000

4………………………………$980……………………………..$47,000

5………………………………$800……………………………..$48,000

6………………………………$700……………………………..$49,400

7………………………………$600……………………………..$50,400

8………………………………$550……………………………..$52,000

9………………………………$500……………………………..$54,000

10……………………………...$465……………………………..$55,800

11……………………………...$435……………………………..$57,400

12………………………………$410…………………………….$59,100

13………………………………$390……………………………..$60,800

14………………………………$375……………………………..$63,000

15………………………………$360……………………………..$64,800

 

THE BOTTOM LINE HERE-- If, because of your child's age, you cannot do the numbers required, then remember that every $$ invested prior to university or college is all to the good! Mutual Funds can deliver 10%/Yr.

The Canadian Government has now improved funding for Registered Education Savings plans by contributing an additional 20% above and beyond what you put into an RESP up to $400/Yr. A $2,000 contribution to an RESP would result in this $400 top up. This all means that if you start saving for your child's education from the time he or she is born, you must contribute $69/month outside a RESP or about $60/month within one.

PLEASE REPOST AS WIDELY AS POSSIBLE!

Email: bboyle@kawartha.net