The $400K 'Rejection Insurance' That Singapore's Successful Parents Never Talk About
- 3 days ago
- 4 min read
The best investment my high income clients ever made wasn't property or stocks but it was the $400K that turned their "rejected" kids into top-earning doctors and lawyers.
Opportunities $400K can buy for your child
Picture this, imagine your kid just received their A'Level results. All of you initially thought he stands a high chance to make it into medical school in one of the top 2 local universities in Singapore. Unfortunately, the kid's result narrowly missed out. He has a good chance to be selected for engineering or pharmaceutical science. Still promising courses but it's not your kid's dream career. Aspiration aside, medical school seems to promise better job security and income potential.
It turns out your kid's grades is good enough to go to medical school in multiple overseas universities. This means that if your child is able to study overseas, they can come back as a doctor and practice locally.
Over my past 7 years as a financial consultant, I've worked with at least 6 individuals who had the opportunity to pursue an overseas education and are now practicing in law and medicine, securing a low to mid 6 figure income in their 30s. This is something that working as an engineer or pharmacist might not reach as easily at the same age.
The Optionality Advantage
Law and medical school intake in Singapore is extremely competitive.
You can see that the ballpark intake of Law School is about 240 students and about 286 students for Medical School at NUS.
That's a very small number in relation to the total population of an enrollment cohort of the Singapore education system at any one time.
On top of that, I learnt from my clients who studied in these schools locally that the cost of education for law and medicine is more than a degree in other more common disciplines. For example, NTU medicine cost about $36,100 each year.
Go local and settle for 2nd/3rd choice or go overseas and get first choice?
This is the problem good education planning can solve for those with significantly more resources.
How much does studying Medicine cost overseas?
The image shown is the cost to study Medicine inclusive of living expenses in Australia. If we compare it with NTU Medicine school for a 5 year course, that would be $180,500 (locally) versus $400,000++ assuming a Singaporean can't get into Medical School locally and has to go Australia. That is almost 2.3x the cost needed.
Optionality stretches beyond medical school or law school. It could be pursuing talents where the development opportunities are better overseas like music, fashion design or heading to prestigious culinary school at Le Cordon Bleu.
IS Your Education Planning Dual Track?
The Certainty Track
I call it the Certainty Track because most parents minimally want to set aside an amount for their kid's education. This usually means having enough to fund studies in NUS, NTU, SMU, SUSS, SIT and SUTD. Even within these choices, most parents mainly plan for a regular university education. This often does not take into consideration studying Law and Medicine.
Essentially, as long as parents saved up about $40K (today's value), they can afford most courses in Singapore as a Singaporean. That's less than $250/month set aside for education over 15 years. Very achievable for majority of Singaporeans even with no investment growth. Simple wealth preservation tools would cover inflation concerns.
The Optionality Track
The optionality track takes into account overseas education as well as law and medicine. It often cannot rely on just setting aside money in the bank. Setting aside $450K - $500K by the time the child turns 18 requires a minimum of $2,000/month set aside. That might be a sum quite rich even for high income earners especially if they have other commitments like big mortgages or multiple kids enrichment classes.
If parents wish to use less money to save up for this goal, they would need to invest their funds for potentially higher returns.
Read a relevant article here: Ideas for Education Planning
Set up your own $400K education insurance
By applying a dual track approach, you can ensure there's a baseline of minimum funds available for local university AND also cater for alternative choices.
Wealth does not guarantee success.
But it guarantees that rejection is not fatal.
And in a system where admission rates are mathematically brutal,optionality is the ultimate advantage.
Education planning is not about funding school.
It is about funding choices.
If you want to also be hand-held through our flagship GTR Approach to plan for your kids optionality without jeopardising your retirement, feel free to reach me by dropping me a message.
Be sure to share the article if you feel this information is helpful. You will enable a lot more people to learn about education planning.
About Janice
I specialize in identifying and eliminating structural retirement risks for high-income professionals who already think they’re doing enough.
Clients look for me primarily to outsource their retirement planning needs so that they can focus on other aspects of life that interests them. Many of whom are very good in earning their incomes in their respective professions and wish to ensure their monies continue to work harder while they focus on what they are good at. Refer to client testimonials here.
Disclaimer: The content created are based on my personal opinions and may not be representative to everyone or any organisation. If you have any doubts or queries pertaining to insurance or investment, please seek professional advice from a trusted adviser in an official setting. You may also reach out to me if you do not have a present adviser using the message box under 'Let's Talk'.
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