How Much You Need To Save If You Ever Want To See Your Kids Graduate?

In an age where the common degree has become a pre-requisite and not so much an advantage, ensuring that you have enough to see your children through a reputable university has inadvertently become one of the most important responsibilities you’ll face as a parent.

Unfortunately, knowing how much to save for your kids’ tertiary education is not an easy question to answer.  In fact, it is downright complex in view of the vast differences in costs from degree to degree, university to university, and country to country.  And even for those who do have a number in mind, there is still the question of when you should start saving, using which savings / investment vehicle.

If you have been wondering about your financial capabilities to finance your kids’ tertiary education, or you have been seeking a workable method to save a sizable study fund for your children; allow iMoney to shed some light on this matter with their latest infographic:

Courtesy of iMoney.my

What's wrong with Malaysia in terms of GDP per Capita? (2012)

Addressing the issue, which Finance Malaysia thinks was critical at a time of globalization heats up, Malaysia needs to formulate and take action immediately without much hesitation. But, before we jump into action, we need to know the root of the problem. Right?

Exactly, we must find out the reason why we left behind other countries in terms of GDP per capita, which refers to the country's gross domestic products at purchasing power parity (PPP) per capita. According to Wikipedia, it was the value of all final goods and services produced within a country in a given year divided by the average population for the same year.

Why not using nominal GDP to measure national wealth?

Comparison of national wealth are also frequently made on the basis of nominal GDP, which does not reflect differences in the cost of living. Using a PPP basis is arguably more useful when comparing generalized differences in living standards on the whole between nations because PPP takes into account the relative cost of living and the inflation rates of the countries, rather than using just exchange rates which may distort the real differences in income.

Singapore is now the richest country in the world.
Where is Malaysia?

According to sources, some of the factors contributing to Singapore's forecast performance are its 'human capital' -- a skilled and educated labour force, the dynamic business environment, openness to trade, capital mobility and foreign direct investment. Also, it is worth noting that there is a global eastwards shift in economic activity -- Singapore is perfectly positioned to take advantage of this.

However, everything is not going well for Malaysia, although we are Singapore's closest neighbour. In terms of GDP, we moving nowhere for past few years amid competitive global environment. But, in terms of population, we believe we accelerated for past one year after government legalized some 1.6million foreign unskilled labourers. Please noted that they are non-taxpayers who consume all the benefits funded by us Tax payers.

On the other side, our brightest and brilliant are forced to mass migrate to other countries. This is a fact which is dampening the future of our country. It's sad because Malaysia supposedly was high on the list in terms of GDP per capita, given the plenty of natural resources that we had and strategic position we located in. Why?

The main reason lies within us, Malaysians. Don't blame the government. Don't blame other countries. Don't blame the statistic. Just blame ourself, Malaysians. A government was formed by its own people, and elected by us. All the while, we have this wrong mentality that we are blessed with valuable resources which can last us for a long long time. Does that mean that we do not need to compete?

Facebooking is a new norm in workplace now.

If you were to ask, Finance Malaysia would take the blame on our mindset, especially youngsters nowadays. Most of them didn't bother about the country and their future. These people go to work for the sake of working only. They follow instructions, without reinventing the way we work. How are we going to excel? Don't even think about competing. It's about time to change for a better tomorrow.

Should Government Abolish PTPTN Loans?

Once again, PTPTN (Malaysia National Higher Education Loan) came to the limelight lately with the wrong reasons. In conjunction with this, Finance Malaysia did a survey on Facebook Page asking our fans "Should Government Abolish PTPTN Loans?", and guess the answer given by majority of them? NO.

Emmm... What does this mean? It's pretty clear that majority of us thinks that PTPTN should be continue for the following reasons:

1. There is no FREE lunch in this world
2. Borrowers should repay what he borrows
3. The scheme did already help many financially distressed students pursuing tertiary education

Thanks for your participation in the survey. Yet, many readers keep asking Finance Malaysia, our view on this matter. Before answering you, we also highlighted that this blog is of freedom of speech, we're not political driven blog, and we tend to be political-neutral in writing. Below is our view on this issue:

1. We agreed that there is no free lunch, especially in Malaysia. We should change our mentality that Government owe us this and that things. We must put in our own efforts to make things happen, and Government's role is to facilitate the process to become easier and smoother. This is why PTPTN loan was offered at the beginning.
   
   
2. Regarding the interest rate charged, it's a mere 3% only. Does it really sky high? Definitely not. Why PTPTN charged 3%? This was because our inflation rate is around that figure. If you take last year inflation rate of 3.5% into calculation, PTPTN are making losses actually, although we repay back with 3% interest rate.
   
   
3. Without interest, anyone of us who qualify to go into varsities will take PTPTN loan, whether he/she is serious in his/her study or not. Why not borrow the money to spend, instead of study, if given free?
   
   
4. Without interest, what is the incentive for student to repay back the borrow amount as soon as possible? Without interest, I will be the one who use whatever money I have now to invest, do business, buy gadgets... last is PTPTN. Agree?
   
   
5. We believe this is one of the agenda purposely created by certain political parties to fish young voters, saying that they will abolish and cleared their outstanding PTPTN loan once they formed the new Government. (Please be neutral on this matter, then only think)
   
   
6. By writing-off the outstanding PTPTN loans amounting to billions of ringgit, Malaysia sure will went into financially distressed level. Then, all of the subsidies will be removed, public sector salary will be cut, all of us will protest because of this. Do you really want this to happen?
   
   

Anyway, this is one of the interesting preview running up to the anticipated general election. Finance Malaysia hopes that political parties from both sides should focus on things that really can benefiting the country. What's the point to form a new Government that will go into bankruptcy?

Before ending this posts, we must highlighted here that Government must clear the doubts by sorting it out fast. If not, many borrowers will wait and stop repayment in anticipating that Government will abolish it soon.

Another point was we lauded PTPTN's intention to reward those prompt and disciplined borrowers with a reduced 1% interest rate. However, why not PTPTN automatically reducing it without much hassle for borrowers to appeal? Now, borrowers must request > wait for revised terms and conditions agreement > print and sign > guarantors signatures > employers details > auto-deductions from salary > return back to PTPTN. Since these are eligible good paymasters, why not treati them automatically?

Failed PPSMI: What is the impact to our Economy?

Yes. Another U-turn from our government. This is called my beloved Malaysia. But, this time it involve our students (innocent future voters) who had to bear the uncertainties between studying Science and Maths in English and Bahasa Malaysia (BM). The new education policy was mooted by then Prime Minister Tun Dr. Mahathir in 2003 in order to raise our competitiveness especially in Science matters.

However, everything can be changed and the government said that it had abolished the teaching of Science and Maths in English (PPSMI) citing poor command of English language deter students from excelling in these two subjects. And, the education ministries said that they already consulted all the schools nationwide, and concluded that majority of them doesn't want to continue with PPSMI for the benefits of students.

Why PPSMI failed in Malaysia?

I would said that the only reason is the lack of commitment from Government. If there is not enough qualified English educated teachers, train them or hire them. If the students are not capable, train them or even make the subject compulsory to pass. If we believes that the PPSMI is crucial for our nation to excel, we must not give up after merely few years of trying. Instead, we should find the solutions to the problems we faced. Every changes on policies will be difficult at the beginning, no need to mention education policies. I believe the 54 years old government should know this better.

What is the impact to our economy?

1. Credibility of the government had lost. How would foreign countries looking at us? At first, they're happy by the move, but settled with disappointment now.
2. Most of the Foreign Direct Investment (FDI) that pouring into R&D and science related industries were westerners. Like it or not, their preferred language is English simply because it is the original language of innovation.
3. Poor commanding of English language is one of the main reason why Malaysia losing out to SIngapore in attracting multi-national companies. We can't deny this. Otherwise, we will continue to lose out.

To end this post, let's understand the following statements by Dr. M:

“You never know, the people who are calling for both subjects to be taught in Bahasa Malaysia may be sending their children to English schools”

Oh my beloved PSD Graduates, where are You?

When writing this article, I am proud to say that I am a local graduate working locally and repaying my PTPTN loan monthly. Who said that graduates can't perform as best as others? Do we necessary needed to obtain hundreds of thousands of loans to study oversea? If I can survive here, why can't you?

Of course, I can't deny that some professional courses offered here are not competitive enough. That's why many professionals opt for oversea universities. By graduating oversea as a doctor or lawyer or engineer, it definitely costs you a hole in the pocket. Please bare in mind, it is not your pocket, but your parents' pocket. This is when Public Service Department (PSD) scholarship comes into the picture to fulfill Malaysia's dream to groom our talents, and your parents' dream too.

Why don't you come back?

Then, this question popped up. Yesterday, it was reported that 65% of PSD scholars did not return home. Surprised? And, most of them is doctor. Although there are thousands of reasons for them to not returning, I would like to stress one thing only here - responsibility. Yes, whatever you take is whatever you give. PSD gave you so much money, supporting your dream to be a successful Malaysians, realizing your parents' dream, is that the way you return the favors of Malaysia Government?

Practicing what you learn from the 1st day?

Even when we were young studying in Kindergarten, we taught to be a responsible person. And, you're professional now. Do you practiced what you have learn all these years? If you do not like the Malaysia's way, why you took up the PSD scholarship in the first place? Instead, you can take your parents hard earned money. Then, you can disappear yourself, and no one will bother about it.

However, if you took PSD scholarship and do not return back to service, this is considered as "investment loss" of Government. This is public money. Meaning every Malaysian can blame you. Even if you succeed in life, you're spiritually failed. Please be responsible to yourself, your family, and your country. Respond now!

What is the job of a student?

As I am writing this post, I know there must be many other student out there doing their part for the school. What I mean here is, these students are not studying or learning or enjoying their school life. Instead, they are told to "do sales" for their beloved school. Do you know that students are running across the town? Do you know that they are sweating under the sun? Do you know that they are wetting under the rain?

Doing Sales for the school?

Indeed, this is not a new phenomena in Malaysia, at least for the past 20 years. It had been practiced this way since my good old student days. Doing sales here meaning a student is going all out to persuade or convince public to donate money for their school. Is it doing sales? By promoting projects of a school, renovations, new hall, new lab, new school field, students are passionate enough to contribute their energy and time for the benefits of their school. If this is not sales, then what?

But, is this the right thing to do?

Please do not forget, the main objective we enroll into school is to study and learn. Although such actions by students is good in nature, schools should not encourage it. If the student is a volunteer, this is nothing wrong. What if it is not? He might feel that he is not loyal to the school, and feel he is being forced to do so. In the end, this particular student will hate the school and his studies.

Students are studying in library

Whose job is it actually?

Ok. Schools need money, especially private schools. But, who is going to get the funding? Finance Malaysia thinks that everyone of us should, except students. Just let student go to school performing their duties - study and learn. In contrast, headmaster and parents association and public at large should put in their efforts to get the funds needed. I would rather see headmaster going all-out to get donations instead of students in the future. Would this proved that the headmaster is good? Of course.