Our years of experience in the industry and knowledge of the worldwide marketplace have given us a real insight into the benefits of both domestic and international policies. We would always recommend for expats to look beyond China when setting up savings plans, especially when it comes to something as important as their children’s university education.
Currency considerations
Taking out an investment policy within China means you will have to use Chinese yuan (RMB) as your currency. That’s fine if you’re planning to stay in the country long-term, but as an expat it’s likely that you will return to your home country or move on at some point. If the latter is the case, taking your savings out of China could prove problematic, as you will have to contend with stringent banking controls and foreign exchange restrictions.
It is much more straightforward to hold your savings in a currency or currencies of your choice overseas; you’ll have a greater level of flexibility if your circumstances change. Most expat children choose to study at universities outside of China, so holding a policy using RMB could be extremely limiting down the line.
A young investment climate
While China is one of the world’s most rapidly-growing nations, its stock market and investment plan portfolio are both still relatively immature when compared to more established countries such as the UK and the US. Therefore, it’s advisable to choose savings plans outside China as you’ll benefit from greater stability for your money.
This is vital when you have a clear, long-term financial goal such as saving for your child’s education. Of course, all investment comes with some risk, but with careful research you can guard against some of this uncertainty to ensure you’re getting the most for your money.
Don’t put all your eggs in one basket
Choosing to keep your money in China will limit your investment options considerably, as domestic policies are heavily focused on the local market. By looking internationally, you’ll have access to an enormous range of products and services, ensuring that whatever your budget or savings needs, there will be a policy to suit you.
It’s a cliché, but when you do your research and get the right advice; the world really is your oyster when it comes to finding the best deals. As any savvy investor knows, diversification is the key to a successful savings strategy.
Offshore investments offer lots of benefits
There are a multitude of other benefits for expats who invest internationally, including increased levels of investor protection and greater tax efficiencies. Working with an international brokerage also means there are no language barriers to overcome, while having your paperwork completed in English will ensure transparency and peace of mind when it comes to control of your investments.
The importance of planning ahead
Wherever you decide to put your money, the most important thing is thinking long-term about your children’s future needs. Getting a degree is one of the most expensive endeavours a person can achieve – and the costs are likely to rise even further by the time your offspring head off to university.
Did you know that the average cost of a four-year course in the US is just under USD 125,000, as high as HKD 495,000 (around USD 64,285) in Hong Kong, and GBP 33,000 in the UK (around USD 54,780)? Factor in the very likely increase in fees, and you could be looking at close to USD 300,827 for a course in the US in 18 years’ time. What’s more, these staggering amounts are for course fees alone – meaning that costs like accommodation, textbooks, food, or spending money still need to be accounted for.
So pat yourself on the back for putting plans in place now. With the right advice, you’ll be safe in the knowledge that you’ve chosen the best offshore investment plan for your circumstances, giving you peace of mind that you can support your child as they work towards achieving their educational goals.
Mark Matlaszek has lived in China for over ten years and is the director of BlueStar AMG in Beijing. He has been helping expat families plan for their children’s future education costs for the last decade, as well helping parents plan for their retirement. For more information on the company, visit www.bluestar-amg.com. If you would like a free consultation, contact Matlaszlek directly at mark.matlaszek@bluestar-amg.com.
Please note that beijingkids does not necessarily endorse the views presented in this article.
Photos courtesy of lendingmemo.com, 401 (K) 2013, Oscar Rohena (Flickr)
