Standard Bank can help you send your child overseas to study

As African citizens become more global, many families are considering opportunities for their children to study abroad.

Accessing specialised fields of study and experiencing new cultures and ways of living are just some of the benefits associated with a global education.

However, the cost of funding such an endeavour is significant and requires careful financial planning well in advance. 

Unless your child receives a comprehensive bursary to study internationally, funding their education without the necessary savings could potentially put you out of pocket.

If you suspect they might want to study abroad one day and you want to offer them that opportunity, you have to start ring-fencing some funds for this purpose as soon as possible.

There are a number of costs to factor in.

It’s not only primary costs of tuition and fees, but also secondary costs such as books, transport, accommodation, health insurance and other general living costs to consider. If you plan to visit your child while they are there, or bring them home during the holidays, that will also set you back financially.

How and where to start

If you have a time frame of 10 years, for instance, the first port of call is to set up an international bank account in your jurisdiction of choice. The tricky part is selecting a currency. While you may plan for your child to study in the UK, they may have different ideas for themselves. And you can’t save in every currency “just in case”. 

However, it won’t be sufficient to simply place foreign currency in this offshore bank account. It is critical to consider investment options that will help your money grow in time. The type of investment will depend on your unique circumstances such as a time horizon, and appetite for risk. 

If you have time on your side, you may want to consider a more aggressive investment approach to start off with. As you get closer to the time for your child to leave home you will need to strategise around your risk approach. This could mean taking some of the cash and placing it into a more conservative investment to buffer against any potential market volatility.

But it might be that you have only three to four years to save and in that case, your risk approach would look different. It is advisable to consult an adviser to specifically address the objective and to map out an investment plan to achieve that goal.

Investment vehicles to consider

In this scenario, you could consider a combination of:

• Fixed-term deposits and notice accounts, which are like bank accounts but provide elevated interest rates and liquidity and are more appropriate for short-term needs.
• More structured investments like capital protected-style products (structured deposits and structured notes) which vary between one- and six-year terms. 
• Unit trusts for additional flexibility.

If you want to put down a lump sum now, you may want to look at discretionary portfolio management services. Instead of placing, for example, R1m in one fund or investment, it could be used to invest in a well-diversified portfolio of investments.

It is important to note these vehicles are all linked to risk. Whether you are cautious, balanced or aggressive, there will be different funds and different portfolios fitting for those profiles. This is where the value of a professional comes into play. 

Decision requires careful consideration, planning

Educating your child at a tertiary level presents many financial challenges and, even in SA, it is difficult to forecast with complete accuracy the exact associated costs. There may be a need to repeat courses or your child might change their field of study.

These costs may be worsened when they are in foreign terms, due to fluctuating currencies, and it is important to assess whether it is the right choice for your child.

Standard Bank has been in business for many years across Africa and its international client solutions are well-established and equipped to provide clients with access to international banking and investment solutions.

Having recently won the International Investment Award for excellence in private banking, Standard Bank is poised to facilitate all your international banking needs and assist in your planning with regards to sending your child to study abroad.

This article was paid for by Standard Bank.