While it may not always be possible to set aside a large enough lump sum upfront, remember that a manageable monthly debit order could build a substantial investment over time.
Not only will your monthly contributions be boosted by potential investment growth, but you'll also stand to benefit from compounding. Compounding occurs when investment returns are added to your original investment and these returns then start earning returns as well. Effectively, this allows you to generate returns on additional amounts that haven't come out of your pocket. If you start saving early, your cumulative contributions could therefore amount to less than the cost of tuition by the time your child's studies commence.
A standing debit order also bumps your investment to the top of your priority list. It takes care of the temptation to spend what you should be saving on something else, or to tweak your savings goal if your budget starts tightening before payday. Despite this discipline, you retain the flexibility to adjust your debit order premium or, in many cases, to cease your premiums altogether if your personal circumstances change unexpectedly.
PPS Investments has set up an online calculator to assist you in determining the debit order investment necessary to finance future university tuition costs. While it is always encouraged that you consult a financial intermediary if you require detailed or specialised advice, the calculator will show you how potential investment returns, the power of compounding and a long-term view can assist you in reaching your investment goals.
