5 ways to build your child’s education saving plan in Malaysia

Why parents should start an education fund sooner?

Parents want the best for their children, and for many families, this includes paving the way for tertiary education as a head start in life and their future career. However, education doesn’t come cheap, and the last thing any parent wants is to be unprepared when tuition fee time arrives. To avoid a financial crunch, parents need a long-term education savings plan for your child.

Here's a rough picture of what different education paths might cost today and further down the road.

None of this is meant to feel overwhelming. It's actually the opposite. When you spread the savings over many years, the monthly amount you need to set aside becomes achievable. Starting from birth versus starting when your child is at age 10 can make a big difference in how much you need to save each month. Time really is your biggest advantage here.

How to decide on the best education fund planning for your child’s education?

Before selecting any savings or investment product, it helps to get a rough sense of how much you will need and how close you already are. You don't need to be super precise. Even an estimate gives you something to work with. Here are three things to think through:

1. What might university cost when your child gets there? 

Take today's estimated cost of a local public, local private, or overseas college or university. A 6% annual increase works as a planning figure for local options and 8% for overseas.

If you would rather not do the maths yourself, the Great Eastern Child Education Fund Calculator can help you with an estimate.

2. What savings do you already have heading in that direction? 

Think about any savings accounts, insurance policies, or investments you've already set up. What might those be worth in 15 to 18 years if they keep growing at their current rate?

3. What's the gap? 

Subtract what you're likely to have from what you'll probably need. That gap is your education fund planning target (the amount your monthly savings need to work toward).

You can also get an idea of how much you’re likely to need by using the online Child Education Fund Calculator. 

5 tips to start saving for your child's education in Malaysia 

A mix of strategies could work well. Here are five approaches to help you build a sound education saving plan in Malaysia. 

1. Look into Simpan SSPN

Simpan SSPN is Malaysia's national education savings fund scheme, run by PTPTN (the National Higher Education Fund Corporation). There are two versions:

• Simpan SSPN Prime: A long-term savings account 
• Simpan SSPN Plus: Education savings product with takaful protection

One of the reasons that makes SSPN attractive is the tax benefit. Deposits into Simpan SSPN Prime qualify for up to RM8,000 a year in income tax relief. If you are in the 24% tax bracket and put in RM8,000, you save RM1,920 on your taxes.

If you choose SSPN Plus, there is potentially another RM7,000 in relief under the life insurance and takaful category, subject to your combined limit.

On top of that, PTPTN announced a 4.1% dividend rate for 2025, the highest in 10 years. That beats most fixed deposit rates
and reflects the scheme's strength.

Get started by downloading the myPTPTN app, registering, and opening an account.

2. Consider an education endowment

Think of an endowment plan such as a savings commitment with a safety net built right in. You contribute a set amount every month, your money grows steadily over the policy term, and when the plan matures (ideally timed to when your child heads to university), you receive a lump sum payout.

What makes these plans good for education fund planning is the premium waiver benefit. If you were to pass away or become permanently disabled before the policy matures, the insurance company steps in and continues funding the plan on your behalf. Your child still receives the full payout when the time comes.

When comparing plans, a few things are worth looking at:

• What's guaranteed vs. what isn't?

Some of the projected payout at maturity is guaranteed, while some depends on the insurer's performance. It is good to understand the split.

• Is the premium waiver included as standard? 

Most plans include it, but confirm it covers both death and total permanent disability.

• Does the timeline line up?

Aim for a plan that matures around the year your child is likely to start university.

• Is there some flexibility?

Life changes and it helps to know whether you can adjust premiums if your circumstances shift.

3. Add some growth with unit trusts, PRS or ASNB funds

If your child is still young and there's 10 or more years before university, you could let a portion of your savings
work a little harder through unit trusts, Private Retirement Scheme (PRS)
funds, or ASNB funds.

• Unit trusts pool money from many investors into a professionally managed fund. They come in a few varieties depending on how comfortable you are with market ups and downs. 
• ASNB funds are government-linked unit trust funds. They have a strong track record of consistent dividends and are considered relatively low-risk, making them a comfortable long-term savings vehicle.
• PRS funds are another option worth considering, especially since they come with individual income tax relief of up to RM3,000 per year. 

4. Consider investment-linked insurance plans (ILP)

An ILP is a hybrid product that combines life insurance coverage with investment in unit trust sub-funds. It is a bit more flexible than an endowment plan as you can often adjust your premium, switch between sub-funds, and increase or reduce coverage as your situation changes over time.

ILPs such as Great Eastern’s SmartProtect Junior work well as part of a broader education savings fund strategy for parents who want both protection and growth potential in one product. The key things to understand before signing up: 

• Returns are not guaranteed

Unlike an endowment plan, the payout at the end depends on how the underlying funds perform.

• A portion of your premium goes to insurance charges

This means not everything you pay in goes toward investment growth. Do factor this in when comparing with other options.

• You have flexibility over the long term

The ability to switch between more aggressive and more conservative sub-funds as your child grows older is a genuine advantage.

5. Diversify your investment portfolio for a balanced approach

Once you have the basics in place, such as SSPN, an endowment or takaful plan, and perhaps some unit trusts, it is worth taking a step back and looking at the overall picture.

A diversified education fund portfolio tends to perform more steadily over the long term than one that is concentrated in a single product or asset class. If you are a risk-averse investor with a preference for risk-free options, its low investment yield may be a disadvantage, especially if you have a great deal of ground to cover to meet your financial goals.

You may wish to consider diversifying your portfolio by putting a portion of your assets into instruments that earn a higher return, such as dividend-paying stocks.

By spreading your eggs among different baskets, you increase your overall investment yield while maintaining a moderate level of risk exposure that could help you gain higher returns on your investments that would give a sense of security to your family especially giving your child education protection plan for the future.

A simple annual checklist to keep your plan on track

• Refresh your cost estimate

University fees change, and your child's interests might too. A quick look at current tuition data keeps your target realistic.

• See how your investments are tracking
  

Are your unit trusts or ILPs performing as expected? If something has consistently underperformed for a couple of years, it might be worth reviewing.

• Gradually shift toward safer ground as university gets closer

When your child is young, a growth-focused portfolio makes sense. As they head toward age 15 or 16, slowly moving more into lower-risk options.

• Give your insurance coverage a once-over

Has anything in your life changed e.g. income, family size, plans for your child's education? Make sure your endowment premiums and coverage still make sense.

• Adjust if life has thrown you a curveball

If you’ve had a tough year financially and your savings are running a little behind, that’s okay. Small adjustments can go a long way.

The families who arrive at university application time feeling financially ready are usually the ones who kept going and made small adjustments along the way. You can absolutely be that family.

If you are unsure on the types of education-saving investments are best for you, have a chat with our Life Planning Advisor. They are there to help you figure it out, at your own pace.