Will your wealth keep up with your children’s education in Kenya and abroad?Thursday May 04 2023
Mr Kimani felt both relief and dread as the aeroplane that his daughter had boarded taxied at the Jomo Kenyatta International Airport, angling to take to the azure skies. She was heading overseas for her undergraduate degree.
The dread was that maybe the young lady would run into harm’s way. Being a foreigner overseas comes with its challenges, he mused. But maybe he was being too fearful, he thought to himself.
But the fear was way lesser compared to the relief in him. Educating a child abroad comes with heavy financial implications but Mr Kimani was sure of one thing: he would not face financial troubles in the three years his daughter would be studying abroad.
During his employment years as a senior corporate leader, he took bold and strategic investment decisions with us at Standard Chartered. Thanks to the Bank’s extensive experience in assisting affluent Kenyans like him to plan for children’s education, retirement among other aspects, he was guided on how he could channel his money into investments that would yield returns aligned to his daughter’s semester calendar.
Mark you, he didn’t place that money somewhere where it would be withdrawn and deposited to his account when required, no. It was money invested in foreign currency bonds and securities investments that yielded returns in the currency of the country his daughter went to. He understood that the currency may fluctuate and therefore by investing early, he preserved the value of the US Dollar, Sterling Pound, Euro, etc that he is paying today.
Do you know what that means? It means that the money he pumped into the investment is intact and pays interest in foreign currency. The yields from the money are the ones educating his daughter. He calls it magic. I think it is being smart with money.
Therefore, as a Kenyan who is figuring out how to finance your child’s education abroad, this article is for you.
Like the case of Mr Kimani, we can get an investment that brings in returns in local and foreign currency for years to lighten the burden of educating your children.
To reach there, we connect you to foreign currency bonds and help you design a portfolio that provides predictable cash flow. If you want to receive USD2,000 at the beginning of your child’s new term, we can plan for a bond that yields that exact amount at that exact time.
At Standard Chartered, we have trained advisory relationship management team that will understand your objectives and propose investment solutions to match that.
The secret to reaping well from bonds is to start early. Going by the years, you can easily predict that in a certain year, your child will be in a certain level — be it advanced-levels or first year in university and so forth. With that knowledge, you can plan your investment to give you returns based on that year you expect your child to join a certain grade or a certain university.
The figure might come to, say, USD50,000 a year for a destination like the United States of America. So, that will translate to USD200,000 for a four-year course, though inflation forces might push it higher.
We can help you create an investment vehicle that will deliver returns which will help you foot that annual bill of USD50,000. And if you want that yield to come in a specific currency e.g Dollars or British Pounds or local currency, we can set it to yield that exact currency.
By starting early, you will also drink from the fountain of compound interest. Compounding is another magical concept for you and your money, if you put it to good use. A parent who plans and invests early is assured of more comfort in fee payment than one who begins later.
Let us also not forget the protection element. Yes, insurance because we do not know what they future has in store for us. At Standard Chartered, we have partnered with reputable insurance companies, to offer education policies that are paired with a life cover. This means that if anything happens to you, your child’s education will go on as you had planned. After all, education is a non-negotiable in life.
So, if you are in search of a less strenuous and sustainable way of educating your child abroad, please email [email protected] and we will discuss the opportunities you can exploit.
Paul Njoki is the Head of Affluent Banking and Wealth Management for Kenya and East Africa at Standard Chartered.