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