Issue No.


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Investing In Education (Part 1)

This article is reproduced with permission from
Normandy Advisory Services Sdn. Bhd (Licensed Investment Advisor)
15th Floor Menara Multi-Purpose, No 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur
Tel : 03 - 469 5560 Fax : 03 - 294 5561

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Parents are generally concerned about their children's education. For young couples in their mid 20s, they are increasingly worried as to whether they will be able to meet their obligations to fund their child's higher education. In this competitive world, education is not optional but a critical determinant of the future.

Good education is expensive. A startling amount of resources are needed to get a good degree. Parents often want to see their children to make it to graduation day. Unfortunately, the amount of money parents need for education can be frightening.

University tuition fees have been rising over the past years and no relief seems to be in sight. There is concern among Malaysians about the skyrocketing education costs both local and overseas. In fact only a few fortunate parents can afford to fund education expenses from their current income.

Clearly greater awareness is needed when it comes to providing children's education expenses. Parents with children studying abroad are already feeling the pinch from the impact of a weaker Ringgit that ultimately translates into higher education costs. The Ringgit has depreciated sharply against most major foreign currencies since the beginning of the year and this means extra burden especially for parents whose children are pursuing higher learning in foreign countries.

Tuition fees of say, US$4,000 for one semester now costs RM14,000 using an exchange rate of $3.50 compared to RM10,080 ($2.52) at the beginning of the year. The difference of RM3,920 may be too much for some parents to bear.

Table 1 depicts the performance of the Ringgit against currencies of popular foreign destinations for Malaysian students. The rising foreign exchange costs mean fewer Malaysians will be studying abroad.

Table 1. The Ringgit's performance against selected major currencies


% Change since January 1997

U.S. Dollar


Singapore Dollar


British Pound


Australian Dollar


Canadian Dollar


New Zealand Dollar


As at 20/11/97
Source: Normandy Research
Ringgit to 1 unit of foreign currency
Figures have been rounded up in the computation

Table 2 shows the average annual tuition and fees for selected universities.

Table 2. The Average Costs for Selected Universities


Average Annual Tuition and Fees (PPP$)

1. University Malaya (Mal)


2. University Kebangsaan Malaysia (Mal)


3. University of Auckland (NZ)


4. Monash University (Aust)


5. Australian National University (Aust)


6. National University of Singapore (Sing)


7. University of Hong Kong (HK)


Source: Asiaweek Magazine
Note: All figures are converted into Purchasing Power Parity (PPP), which takes into account price differences in each country.

All of a sudden you realize that your son or daughter will be ready for university in the next few years and you have not planned or saved anything. Will you be able to afford it when the time comes?

It costs roughly RM30,000 per year for higher education fees locally (amount varies with the type of course selected) and at least RM50,000 per year (depending on which country and course type) for attending a foreign university. You need that amount of money for an average three to four years. How do you get that money? The economic slowdown and the weakening Ringgit is another worry. You get totally depressed.

Do not be distressed, you are surely not alone. In fact, there are only a handful of parents who seriously plan for their childrenís education from an early stage. Some parents save less than half of what is needed to provide for their education expenses while there are some who have not saved anything at all.

Despite the current crisis we are facing, the good news is that planning does make education more affordable. If you are planning for your childrenís education, ask yourself the following simple questions;

1) What kind of college will your children likely attend?

2) How long is the entire study course?

3) Have you saved anything towards your children's education? If yes, how much?

4) How much time do you have left to save?

5) Are you able to seek any form of financial assistance?

6) Do you want your children to work part-time while at college?