Mutual Funds Could Be a Good Start to Higher Education
By Saghir Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)
Most parents dream of sending their kids to college. They also have nightmares about how they’re going to pay for it.
Who can blame them? It cost about $20,000 a year to send a kid to a private college these days. The bad news is tuition and room and board are supposed to double, according to Ernst & Young.
What’s a parent to do? Find some great mutual funds that meet all of the Islamic rules of investing. Amana is of one of those funds, to the best of my knowledge that invests Islamically and Wisdom House is another. I am sure there are others but research needs to be done on them first. Investing in equities is one of the best ways for you to create wealth. Low yielding bonds and cash simply won’t generate the returns you will need to finance a four-year college education.
Over the past 20 years, for example, stock in the S&P 500 have gained 17.8% a year while intermediate government bonds and 30-day treasury bills returned only 9.9% and 7.2%, according to recent figures. We, as Muslim, cannot invest in fixed securities. So two of the best Investments are real estate and stocks. Evaluate the pros and cons of both investments and decide which will be right for you.
I have chosen to set up education funds for each member of my family. As I have indicated earlier, you can find a good mutual fund, invest in it or try to find a good growing company. In the high technology field some good examples are Lucent, Intel, Microsoft, Sun Micro Systems. Select the top companies, which include Ely Lily, Warner Lambert, Pfizer, Abbot and others. For the sake of diversification, also choose some retail sectors.
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
