How to Save for Your Child's Education in Singapore

The Numbers You Need to Know

Before you start saving, you need a target. Here is what education costs in Singapore in 2026:

Local university (NUS, NTU, SMU, SUTD) for citizens:
• Tuition fees: $8,000-$13,000/year depending on course
• 4-year degree total: $32,000-$52,000
• Living expenses: $500-$1,000/month if living away from home

Overseas university:
• UK: $150,000-$250,000 total (3-year degree + living)
• Australia: $120,000-$200,000 total (3-year degree + living)
• US: $200,000-$350,000 total (4-year degree + living)

For most families planning for local education, a target of $60,000-$80,000 per child is reasonable. If you want to keep overseas options open, aim for $150,000+.

Strategy 1: Maximise the CDA First (Free Money)

Before you invest a single dollar elsewhere, fill your CDA to the matching cap. This is the highest guaranteed return you will find anywhere.

1st or 2nd child: Deposit $6,000, government matches $6,000. That is a 100% instant return.

3rd child or more: Deposit $12,000, government matches $12,000.

CDA balance transfers to the Post-Secondary Education Account (PSEA) at age 13, which can be used for polytechnic, ITE, and university fees.

This is literally free money. Do it first.

Strategy 2: Regular Investment Plan

For a long time horizon (15-18 years), investing in a low-cost index fund through a Regular Savings Plan (RSP) is one of the most effective approaches.

How it works:
• Set up a monthly auto-investment of $200-$500
• Invest in a broad market index fund (e.g., STI ETF, global equity ETF)
• Dollar-cost averaging smooths out market volatility
• Historical returns for global equities: 7-10% per annum over 20+ year periods

Example: $300/month for 18 years at 7% annual return
• Total invested: $64,800
• Projected value: ~$130,000
• Growth: ~$65,000 from investment returns alone

Platforms for RSPs in Singapore:
• POSB Invest-Saver: From $100/month, invest in STI ETF or ABF Bond ETF
• FSMOne RSP: Wide selection of ETFs and funds, from $100/month
• Endowus, StashAway, Syfe: Robo-advisors with education-focused portfolios

Pros: Potentially highest returns over 15+ years, flexible contributions, no lock-in Cons: Market risk (your balance can drop in any given year), requires discipline, no guaranteed outcome

Strategy 3: Education Endowment Plan

Endowment plans from insurers offer guaranteed returns and a payout at a specified age (typically 18 or 21).

How it works:
• Pay monthly premiums ($200-$500/month) for a fixed term (15-20 years)
• Receive a guaranteed payout at maturity, plus non-guaranteed bonuses
• Life insurance coverage included (payout if parent passes away)

Typical returns: 2-3% per annum guaranteed, with potential for 3-4% including non-guaranteed bonuses

Example: $300/month for 18 years, 2.5% annual return
• Total premiums paid: $64,800
• Estimated payout: ~$80,000-$85,000

Pros: Guaranteed returns, forced savings discipline, life coverage included Cons: Low returns compared to investments, penalty for early termination, inflexible premiums

When endowment makes sense:
• You know you will not stick to a voluntary savings plan
• You want certainty over potential higher returns
• You value the life insurance component
• Your time horizon is shorter (under 10 years)

Strategy 4: Singapore Savings Bonds (SSB)

SSBs offer risk-free returns backed by the Singapore government, with full liquidity (redeem anytime with no penalty).

Current yields (2026): Approximately 2.5-3.0% per annum for 10-year hold

How to use for education:
• Buy SSBs monthly ($500 minimum) as a bond allocation within your education fund
• No risk of capital loss
• Can redeem anytime if you need the money

Best for: The portion of your education fund you want to be absolutely safe, or if you have a shorter time horizon (under 10 years).

The Hybrid Approach (Recommended)

For most families, a combination works best:

Years 0-5: Foundation
• Max out CDA matching ($6,000 deposit for 1st/2nd child)
• Start RSP: $200/month into global equity index fund
• Use CDA for childcare fees (preserves cash)

Years 5-12: Growth
• Continue RSP: Increase to $300-$500/month when possible
• CDA balance grows with interest
• Keep contributions consistent regardless of market conditions

Years 12-15: Start de-risking
• Shift 30-40% of invested funds from equities to bonds/SSBs
• CDA converts to PSEA at age 13

Years 15-18: Preservation
• Shift to 60-70% bonds/SSBs
• Avoid significant equity exposure close to when you need the money
• Confirm university costs and adjust target

How Much Should You Save Monthly?

Here is a simple table based on your target and time horizon:

The earlier you start, the less you need to save monthly. An 18-year head start versus a 12-year one reduces your monthly commitment by 40%.

Common Mistakes

Starting too late: Every year you delay costs you significantly. Starting at birth versus age 6 can mean saving $150/month less for the same goal.

Putting everything in endowment plans: Endowment returns of 2-3% barely beat inflation. For a long horizon, you are likely better off with a diversified investment portfolio for at least half your education fund.

Not accounting for inflation: Education costs rise 3-5% per year. A degree that costs $40,000 today will cost approximately $70,000 in 18 years. Build inflation into your target.

Forgetting about PSEA: The CDA-to-PSEA pathway is essentially a government-funded education account. Use it.

Over-investing for education: Do not sacrifice your own retirement savings for your child's education fund. Your child can take a study loan; you cannot take a retirement loan.

Tax Benefits to Remember

Working Mother's Child Relief (WMCR): The tax savings can be redirected to your child's education fund. For a mother earning $80,000/year with one child, WMCR saves approximately $1,800/year in taxes.

Supplementary Retirement Scheme (SRS): Not directly for education, but SRS contributions reduce your taxable income, freeing up cash that can go toward education savings.

The Bottom Line

The best time to start saving for your child's education was at birth. The second best time is now. Here is the priority order:

1. Max out CDA matching (100% guaranteed return) 2. Start a monthly investment plan ($200+ into a global index fund) 3. Build a bond/SSB allocation as the timeline shortens 4. Consider endowment only if you need forced savings discipline

Even $200/month from birth, invested wisely, can grow to over $85,000 by age 18. That covers a full local university degree with room to spare.

For more on government benefits, see our Baby Bonus and CDA guide.