How Parents Can Start Building A University Education Fund For Your Young Children

This article is written in collaboration with uSMART Securities (Singapore) Pte Ltd. (uSMART). All views expressed in this article are the independent opinion of DollarsAndSense.sg based on our research. DollarsAndSense.sg is not liable for any financial losses that may arise from any transactions and readers are encouraged to do their own due diligence. You can view our full editorial policy.

Having a child is life-changing. From stocking up diapers to inevitable visits to the paediatrician to researching preschools, new parents will find themselves juggling many new financial and non-financial responsibilities.

With so much time, energy and money spent on these immediate concerns, planning for something nearly two decades away – like your child’s university education fees – can feel less urgent.

But, just as you will quickly learn that raising a child in Singapore can be expensive, the cost of university education 20 years down the road will similarly be increasing. 

How Much Will Your Child’s University Education Cost In 20 Years?

To get a ballpark figure of how much a university education costs, we looked at the annual tuition fees that undergraduate students at NUS have to pay in 2024/2025:

Source: NUS (As of February 2025)

The median annual tuition fees that new Singaporean undergraduates have to pay at NUS is $9,025. Simply multiplying this over a 3-year course, we can use a benchmark figure of $27,075 for how much a university education costs today.

While no one can predict how much a university education will cost in 20 years, we can use Consumer Price Index (CPI) data to estimate how inflation will impact this figure. In the past 20 years, from 2004 to 2024, the cost of Education in Singapore rose close to 74% or about 3% per year. If we simply extrapolate this figure over the next 20 years, we may be looking at a cost of $47,111 to put a child through university then.

Note that this rough estimation may not be accurate and is purely intended to highlight the importance to start building and growing a university education fund early for your children, especially with the large sums involved. 

Why You Should Dollar-Cost Average (DCA) When Building A University Fund

With time on your side, thankfully, you don’t need to set aside an overwhelming lump sum upfront. Instead, you can start a dollar-cost averaging (DCA) investment approach – steadily growing your child’s university education fund each month over the next two decades.

Here’s why:

#1 You Can Start With A Small Investment

The premise of Dollar-Cost Averaging into the market is to invest a fixed amount at regular intervals. This makes investing more affordable and less daunting – you can easily start by setting aside as little as $100 a month. 

If you invest in a broadly diversified investment, such as the S&P 500 ETF, which has historically returned 11.36% p.a. in the past 10 years, you can potentially achieve your target university fund well before your child enters school.

For example, if you are able to achieve a return of 7% p.a., investing $100 a month towards your child’s university fund will see it grow into close to $50,000 in 20 years’ time.

By starting small and taking advantage of compounding growth over the long-term, you can steadily grow your investment portfolio to achieve your financial goals. Developing a habit of consistency and discipline towards building up your child’s university fund can also rub off on other aspects of your financial planning and personal life – and on your children.

Using a comprehensive brokerage account like uSMART, you can invest in over 10,000 US and Singapore stocks and ETFs, including the S&P 500 ETF used in our example, under its Regular Saving Plan. The minimum amount you need to invest is just $100 or US$100, depending on the investment denomination.

Read Also: Guide To Opening, Funding & Trading A uSMART Account In Singapore (Within A Day)

#2 No Reason To Time The Market

Since most people are not expert investors, there’s really no reason to think you can time the market with any accuracy.

By investing consistently, regardless of whether the markets are up or down, you reduce the risk of poor market timing decisions and investing a large sum right before a market crash. 

For example, the chart below shows that the S&P 500 Index has crashed more than 10% on at least 3 instances in the past 10 years. But, after each crash, we can see that the market has always recovered to break new highs.

Similarly, the market dipped nearly 10% since its previous peak in mid-February to mid-March – and has rebounded about 5% since then. 

Instead of trying to predict the bottom of the market, a DCA investment strategy ensures you invest consistently as the broad market rises in the long-term – so you have the best chance of hitting your investment goal.

Source: Screengrab from uSMART brokerage trading platform

(As of 25 March 2025)

Editor’s Note: The S&P 500 has since dipped to around the 505 mark, as of the publishing date of 7 April 2025. This highlights the volatility of the financial markets, and reinforces the benefits of Dollar Cost Averaging (DCA) – so you do not time the market. For reference, anyone who invested just a month ago, the S&P 500 has already dropped close to 20% since then.

Read Also: Investing During Volatile Market: How To Make Smarter Investment Decisions Using uSMART

#3 Navigate Volatility In The Financial Market Confidently

As a follow-up to the previous point, you can even see the market ups and downs as a good thing rather than something you should lose sleep over. When the investments you want to buy dips, you are getting a “better price”.

Let’s take the example of investing $1,000 a month in the last year (from March 2024 to February 2025). Overall, you would have invested a total of $12,000. Note: you can start investing with a minimum of $100 on the uSMART brokerage platform.

At the end of 12 months, your investment portfolio would be worth $12,807. While you can see in the table below that you would have been better off investing the full $12,000 at the start in March 2024, you only know this in hindsight. 

In fact, the best month to invest was not in March 2024, but in May 2024 instead. On the other hand, if you were timing the market, and invested ended up investing a lump sum in December 2024, it would have resulted in the worst overall outcome.

The point of Dollar-Cost Averaging into your investments is to take the price fluctuations (and your emotional responses) out of the equation. When the S&P 500 Index is high, your $1,000 investment buys fewer units, and when the price is low, the same investment will buy more units. Doing this consistently will smoothen out the effects of price fluctuations over time.

Start Using A DCA Strategy To Build Your Child’s University Fund

While parents with young children in Singapore may be focused on your immediate financial expenses, you cannot ignore your future financial goals for your child. 

Fortunately, the Government has given young families some reprieve – to potentially consider longer-term financial goals – with several announcements during Budget 2025. First, a one-off $500 Child LifeSG Credit will be given to parents for each child they have under age 12, and secondly, larger families can look forward to an annual $1,000 Large Families LifeSG Credit for each third and subsequent child they have. 

By using a Dollar-Cost Averaging investment strategy, you can build a university fund gradually – without the stress of setting aside a lump sum or having to time the market. Instead, you leverage on the power of compounding over the long-term to do the heavy lifting, and even take advantage of market ups and downs to build a resilient portfolio.

With uSMART, you can automate a monthly invest plan via its Regular Savings Plan. For example, if you want to invest in the S&P 500 ETF, you can click on the “Trade” button on the bottom left of your screen, and select the “Regular Saving Plan”.

The minimum investment amount is US$100 in this instance (and will be $100 if you select a Singapore-dollar counter instead). You can choose to fund this investment with either your uSMART Account balance or eGIRO from your Bank Account, or both – where uSMART debits your account balance (in the trading currency) and only debits from your bank account when there is insufficient funds.

You can also make more granular selections, such as which day of the month you want to make the investment and at what time, possibly to coincide with your salary credit. You can also choose to make a weekly or daily investment if you prefer.

Source: Screengrab from uSMART brokerage trading platform

(As of 25 March 2025)

One major consideration when embarking on a DCA investment strategy is the brokerage commission cost that you will incur, especially since you are investing smaller amounts.  

uSMART negates this consideration with its Zero Cost Regular Saving Plan (RSP) from now till 30 June 2025. There is $0 brokerage commission, no minimum Platform Fees, no exchange fees and no custodian fees for trading US stocks. When you make a US$100 monthly investment into the S&P 500 ETF via the RSP, you won’t be paying any extra costs apart from the cost of the units you buy.

That’s also another reason to invest with uSMART now – as it allows fractional investing for US counters. The minimum brokerage charge is US$1 for trading less than 1 share.

From 26 March 2025, uSMART has also reduced its Platform fees for US stocks to US$0.88 for stocks trading at US$40 and above or US$0.005 per share (min. US$1; max. 0.5% of transaction amount) for stocks trading lower than US$40. Combined with its $0 brokerage commission, this makes it the cheapest options trading platform in Singapore.

For those who want to trade Singapore stocks, uSMART’s brokerage commission is 0.03% of the transaction value (Min. $1 per order) and Platform Fee of 0.03% of the transaction value (Min. $1.88 per order). Fractional investing is not available though, and may need to be appropriately size. 

Finally, as your investing confidence grows and you climb up the corporate ladder, you may have more to set aside for your child’s university funds, as well as other long-term financial commitments. You can always increase the size or frequency of your investments to upsize your investment portfolio and long-term returns.

uSMART offers even more incentive to start building your child’s university education fund, and for other investment goals, with a sign-up bonus of up to US$202. New investors stand to get US$14 in cash vouchers and free US and SG live market pricing, as well as earn 0.02 Tesla shares worth about US$8, and cash vouchers worth up to US$180 when opening an account and investing with uSMART. 

Sign up now to enjoy uSMART’s latest welcome rewards!

Read Also: Learn & Invest With uSMART Securities, A Brokerage Firm That Wants To Help Millennial & Gen Z Become Smarter Investors

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