Education Bonds: Saving for Private Secondary Education

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Education Bonds: Saving for Private Secondary School

Darren and Jenny have one child and are planning for his secondary education at a private school in Melbourne. They aim to ensure they have sufficient funds to cover all tuition fees and associated costs throughout his education.

Investment Details Summary

Initial Investment: Darren and Jenny began their Futurity Education Bond with a substantial initial lump sum investment of $100,000.
Ongoing Investments: In addition to the initial investment, they committed to ongoing savings by contributing $1,250 per month to the bond. These monthly contributions continued consistently for 10 years. (total $150,000)
Total Contribution: Over the 10-year period, their monthly contributions totaled $150,000 ($1,250 per month x 12 months x 10 years). Adding their initial investment of $100,000, the overall total contributions to the bond amounted to $250,000.
Bond Value after 10 years: Aprox $320,000
Cost of Private School Education: $150,000
Remaining funds after education expenses: $170,000

Education & Financial Outcomes

Child’s Private School Education

Their child attended private school for secondary education from Year 7 to Year 12.
The total cost for tuition fees and associated expenses over the six years of secondary education was $150,000.

Growth of the Bond

The bond grew through the tax-deferred compounding of investments over the 10 years.
With an average annual return of about 5% on the invested amount, the bond’s value increased significantly due to both contributions and returns.

Bond value after 10 Years

By the end of the 10-year period, the Futurity Education Bond had grown to a total value of approximately $320,000. This includes both their total contributions of $250,000 and the earnings accumulated within the bond.

Funds remaining after education

After covering the $150,000 required for their child’s secondary education , Darren and Jenny had $170,000 remaining in the bond.

Since they had held the bond for more than 10 years, the withdrawals used for education expenses were tax-free, maximizing their savings.

The remaining $170,000 could continue to grow tax-deferred within the bond or be used for future education expenses, such as university tuition or other educational costs, also potentially benefiting from tax-free withdrawals.

By starting with a large initial investment and making consistent monthly contributions, Darren and Jenny were able to effectively save for their child's education while also benefiting from the tax-efficient growth of their investments in the Futurity Education Bond.

Education Bonds for the Future

Talk to our financial advisers to find out how you can achieve tax-efficient investment growth with Education Bonds.