Children overall education fees

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After graduating from JCU, David has been working in a local company as a finance manager for 2 years. He is currently earning $4,000 per month. Over the last 2 years, he has successfully saved $20,000 in his bank account. However, David is considering to invest his savings to fund for his children's education expenses. He feels that based on the increasing cost of education in Singapore, he will need $200,000 in 6 years to pay off his children overall education fees throughout their primary school period. Assuming David's salary stays constant throughout 6 years from now.

a. Based on the past performance of S&P 500 index, David expects an average return of 12% p.a. on his investment. If he decides to invest all his savings in the bank only, how much will he get in 6 years? Will David have $200,000 he needs in 6 years? If not, how much more money will he need today? PV=FV/(1+r)t ; FV=PV(1+r)t.

b. What financial advices you could give David to achieve his goal in 6 years' time?

Reference no: EM133116127

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