If experts recommend starting academic preparation for admission to a foreign university as early as the 8th grade, then financially - the sooner the better. This will cause less stress for the family budget and the family itself. First, you should understand the approximate amount, which depends on the country of study, university and direction. There are several options for collecting this considerable money, let's consider each of them.
The main criteria for savings instruments: income, reliability and guarantees, storage periods, ease of return and monetization, additional payments in case something happens to the parents.
💰 Keeping cash at home
Money loses value over time due to inflation, making it an unprofitable way to save. It is also not a secure option, as you could easily spend the money impulsively or lose it if something happens to your home. The only advantage is that you can access your cash easily.
🏠 Real estate
Can be a profitable investment, depending on the location, however, it requires consistent investment in maintenance to ensure its value appreciates in the long term. Selling real estate quickly to get a large sum of money can be quite challenging
💼 Private business
It all depends on the person running the business. In addition, as the pandemic has shown, entire industries can shut down for long periods of time. When you invest in a business, you are also spending additional money, and it can be extremely difficult to get money out of it for education. There is no talk of additional compensation for time off work or serious medical treatment for business owners.
💹 Stock market investment
There is no guaranteed return. It is true that you can start with small amounts, but large investments require knowledge and good communication with a broker: when to sell/buy to maintain your portfolio of securities. You can quickly sell your securities if necessary, but if you make a deal at an inconvenient time, you risk losing money.
💻 Cryptocurrency
According to statistics, Ukrainians are not believers in long-term instruments, but at the same time they are among the first in the world to use cryptocurrencies. Since 2016, there has been a thousandfold increase in the value of digital currency, but experts do not predict such a rapid surge in the future. Therefore, a person who invests large sums in digital currency now can either get super profits or lose their investment.
💳 Traditional banking instruments
Deposits are clear and accessible. You can clearly see what the return will be, but there are some nuances. If you invest a large sum, the Deposit Guarantee Fund can only return up to UAH 200,000. When you deposit money for a maximum of one year, there is often a temptation to withdraw it and not extend the deposit. And the tax burden on the accrued interest significantly reduces the effective interest rate of the depositor.
🛡️ Life insurance contract
The insurance company keeps your money, accrues additional investment income, and protects it from inflation through indexation. This is a guaranteed return.
A long-term contract - over 15 years - can be concluded from the birth of a child. The longer the period (from 5 years), the higher the return on the program you choose for your child's education. It is even possible to increase it at the expense of a tax deduction, to reinvest the compensation for personal income tax that the state provides you. Long-term termination of the contract is also possible, but it reduces the amount that you can receive under the program.
It is important that each contract has additional protection. For example, for urgent treatment, you do not need to withdraw money from your dream, financial responsibility is transferred to the insurance company. Or if the policyholder (payer) has lost his life or ability to work, the company will pay itself until the end of the contract to protect your goal.
The listed tools allow you to accumulate the necessary amount for your child's education - with different risks and effectiveness. The main thing that parents need to understand: there is no quality free education either in Ukraine or abroad. At a minimum, you will have to pay the registration fee and related expenses.
So if we want to create a foundation for our child for better knowledge, networking, advanced learning technologies and broadening their horizons, we need to be prepared for this.
