Gold for your child's education fund: how to plan and the limits to understand

Why an education fund is different

Most long-term savings have no fixed date. A child's education fund usually does: you know roughly when your child will start higher education. That has two effects. First, the horizon is long, so you have time to save bit by bit. Second, as the date gets closer, you have less time to wait if the value of your savings is down.

In its Annual Report 2020, BNM lists higher education costs as one of the risks to identify in financial planning. Starting to save early, and automatically, is also among its tips.

Compare official options first

Before choosing gold, get to know the options designed for education. Simpan SSPN Prime from PTPTN (formerly known as SSPN-i) was introduced in 2004. According to PTPTN's official portal:

• savings are government-guaranteed;
• an annual dividend is paid;
• individual income tax relief of up to RM8,000 on net savings has been extended for the 2025 to 2027 years of assessment;
• a matching grant of up to RM10,000 is available to eligible families.

All benefits are subject to PTPTN's terms and conditions. Check the latest details on the PTPTN portal before deciding.

Where gold can fit

Gold can be part of a long-term education fund for families who want to diversify their savings. With GAP, the minimum purchase is RM100, or multiples of RM50, or 1 gram, and the weight is recorded to 4 decimal places (GAP terms, clause 1.8). Every purchase is recorded in the GAP Statement (clause 1.5), and Public Gold charges no storage fee on GAP gold (clause 1.16).

The second formula shows why the value of a gold fund can't be predicted exactly: it depends on the price on the day you sell, not the price when you bought.

Whose name is the account in?

A GAP account is opened in the account holder's own name, and the gold in it belongs to that account holder. If you save for your child in your own account, on the record the gold is still yours. The GAP terms mention a service for transferring GAP gold from one account holder to another (clause 1.15). For accounts for people under 18, check the latest official requirements with Public Gold. We make no claims about those requirements here.

Cut the risk as the date gets closer

• Plan when to move into cash. A few years before the first fees are due, start converting part of the gold into cash in stages, not all at once at the last minute.
• Remember the payment timetable. The minimum sell-back is 1 gram, and money is credited after confirmation within 1 to 2 business days (clauses 3.2 and 3.5).
• Don't rely on one type of savings. A mix of cash, official education savings and gold gives you more options.

This is general guidance, not a personal financial plan. Every family's needs are different.

Risks and costs

• Price risk: the value of gold can fall, including in the year your child needs the money. There is no guaranteed profit.
• Spread: the buy-back price is lower than the buying price at the same moment.
• Gold Premium: charged if you withdraw physical gold, minimum 1 gram in multiples of 1 gram (clauses 2.3–2.4).
• Cancellation charges: may apply if a buy, withdrawal or sell instruction is cancelled (clauses 1.17, 2.7 and 3.7).
• No PIDM protection for gold-related products or accounts, and GAP is not a deposit (clause 1.2).

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