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Leveraging mutual funds for school fees: Financial tool for Nigerian parents

September 19, 2023
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Meet Amina, a determined mother with big dreams for her children’s education. As Lagos’ hustle and bustle intensifies, she meticulously prepares breakfast while ensuring her kids, Ibrahim and Fatima, are dressed and ready for school. Amina knows that education is the key to unlocking their potential and securing their future in an ever-evolving world.

But here’s the twist: Amina’s determination is not just about getting her kids to school every day; it’s also about ensuring she can afford their education, even in the face of rising tuition fees and the occasional unexpected expenses. She understands that the road to their dreams is paved with education, and she’s unwavering in her commitment to providing them with the best opportunities.

Towing the lines of Amina’s story, we’ll explore how mutual funds can become not just an investment tool but a financial lifeline for those seeking a solid education for their children.

In today’s ever-evolving financial landscape, planning for the future has become more crucial than ever. Indeed, one of the significant challenges that many Nigerians face is how to fund their children’s education. Thankfully, mutual funds provide a practical and effective financial strategy for meeting educational expenses. To simplify, let’s identify the reasons mutual funds provide good financial cushion for important bills like school fees.

Understanding mutual funds

Mutual funds are like a team effort in the world of investments. Imagine you and a group of friends each chipping in some money to buy a collection of different things like stocks, bonds, and other investments. Then, you hire a skilled manager to take care of these investments for you. The goal is simple: to make more money over time. So, mutual funds are a way for many people to join forces, invest together, and hopefully, see their money grow under professional guidance.

The role of a financial services company

Coronation Asset Management understands the importance of a comprehensive financial plan. Coronation specialises in lending, insurance, and investment, making the company well-versed in assisting individuals in achieving their financial goals. With the expertise available in-house, the business provides valuable guidance on leveraging mutual funds for school fees.

Leveraging mutual funds for school fees

Benefits of leveraging mutual funds for school fees

1. Diversification: Mutual funds offer diversification by investing in a wide range of assets. This minimises the risk associated with investing in a single stock or bond, thus providing stability and steady returns over the long term.

2. Professional management: Mutual funds are managed by Coronation’s expert fund managers who have in-depth knowledge of the financial markets. These professionals constantly analyse market trends, making informed investment decisions on behalf of the investors.

Read also: Your Pension May Not Be Enough

3. Flexibility: Mutual funds offer various investment options, allowing individuals choose funds that align with their risk tolerance and investment objectives. Whether one prefers equity funds, bond funds, money market funds, or real estate investment trusts (REITs), there is a fund to suit every investor’s needs.

4. Liquidity: Mutual funds provide liquidity, allowing investors easily access their funds when needed. This is particularly helpful when it comes to financing school fees since it offers the flexibility to withdraw funds as required.

5. Tax efficiency: Mutual funds in Nigeria enjoy certain tax advantages, making them an attractive investment option. By investing in tax-efficient mutual funds, you can optimise their returns and potentially reduce their tax liabilities.

Implementing the strategy

 Here is a step-by-step approach to leveraging mutual funds for school fees:

1. Define educational goals: Clearly identify the educational goals for your child, including the desired institution, duration, and estimated costs. This will help determine the investment period and the required amount to be invested.

2. Assess risk tolerance: Evaluate your risk tolerance and choose a mutual fund that aligns with your comfort level. Conservative investors may opt for bond funds or money market funds known to be less risky, while those seeking higher returns could consider equity funds which are riskier.

3. Seek professional advice: Consult with Coronation Asset Management to determine the most suitable mutual fund(s) for your educational goals. Coronation will assist to help you consider factors such as historical performance, expense ratios, and fund manager expertise.

4. Make regular contributions: Set up a systematic investment plan (SIP) to make regular contributions to the chosen mutual fund(s). This disciplined approach ensures consistent investments and takes advantage of the power of compounding.

5. Monitor and review: Regularly monitor the performance of your mutual fund(s) and review your investment strategy with your financial advisor. Adjustments may be necessary based on changing market conditions or revised educational goals.

Zooming out:

Mutual funds offer diversification, professional management, flexibility, liquidity, and tax efficiency, making them an ideal investment vehicle.

By following a systematic approach and regularly reviewing the investment strategy, parents can ensure a secure financial future for their children’s education

Incorporating mutual funds into an overall financial plan not only provides peace of mind but also lays a solid foundation for educational aspirations of Nigerian families.

How will Amina’s story end?

As schools reopen, Amina sits at her kitchen table, reviewing her children’s school fees account. She can’t help but smile at how far they’ve come since she first ventured into mutual funds. The journey hasn’t been smooth, but she learned valuable lessons along the way. Amina discovered that mutual funds were not just a way to invest money; they were a powerful tool that could turn aspirations into realities.

With each passing school year, Amina’s investments in mutual funds have grown, and so has her confidence in her financial future. She has realised that by planning ahead and harnessing the potential of mutual funds, she could ensure her children’s education without sacrificing her other financial goals.

Today, Ibrahim and Fatima are thriving in school, and Amina is at peace knowing that she’s securing their educational journey. She has even started a mutual fund account for them, instilling in them the importance of financial planning from an early age.

As a Nigerian parent, Amina has not only provided her children with a solid education but has also paved the way for a brighter, financially stable future.

Amina’s story is a testament to the power of mutual funds as a financial tool  for Nigerian parents and the larger public too . It’s a journey that started with determination and led to financial empowerment. So, if you’re a parent with dreams for your children’s education or simply someone looking to invest wisely, consider mutual funds as a key tool on   your path to financial success. Just like Amina, you can leverage mutual funds to turn your aspirations into achievements and secure a brighter future for yourself and your loved ones.

Be like Amina, secure your future by reaching out to us for financial guidance.

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