So, now I have a question from Mr. Khoo. He is from PJ. Now his question goes like this My child is 13 years old now.
I intend to send him to the US and I want to plan for my children’s tertiary education. My bank’s relationship manager recommended me to put the money into
dual currency investment or layman may call it DCI. So, is that the right thing to do? Now
I think for the benefit of the viewers, I need to explain what is DCI. This DCI basically is an investment whereby you go and bet on the currency
movement. In this case for this Mr. is the US Dollar currency movement. If you win the bet, you will get some extra return higher than fixed deposit.
If you lose the bet, you would end up getting the currency, say for example, in this case the US dollar currency. So on the surface, this DCI may sound like the right place or
right investment tool for you to use. Why? Because you will receive US dollar
that you will need when you lose the currency ‘bet’. However you will
always get this US dollar at the poorer exchange rate compared to if you were to exchange for US dollar from the money changer in the market. So I would think
this may not be a very smart thing to do. Since your child is only 13 years old,
which to me is rather young. May be he would need the money when he
is 18 or 19 years old. So I would suggest two options for you to consider to
park the money and then to grow the money for funding of his tertiary
education. Option no. 1 is that you can convert the money that you have now
into US Dollar today. Then you will invest into US denominated or
US investment assets. Say 2, 3 years before you’re going to use
the money to fund education, you will convert the money, convert the
investment into cash. By doing so, you’ll be able to avoid the volatility
of the US currency exchange against Ringgit. But the only setback
or downside of this option is that if you are not so familiar with US
dollars kind of investment asset, this may not be a suitable option for you. If you
are not familiar with US investment asset. I would suggest second option whereby you will invest your money that you want to provide for your children education into
local investment, say in Ringgit based kind of investment. Then 2, 3 years before
you need to use a money, then only you start converting it to US Dollar and
put into the US bank account. By doing so, you will still be able to grow your money using the investment that you’re familiar with and at the same time,
you’ll be able to manage the currency volatility as well. Now in conclusion,
DCI or dual currency investment is not the right way for someone to plan for
children’s tertiary education in overseas