Does stepping into middle age hinder you from pursuing dreams?
Lawrence and Connie have both had successes in their respective careers. With a combined monthly income of around HK$100,000 and no children to take care of, they are thinking of completing a degree at a top-notch overseas university, a move that could push their careers to the next level while realizing dreams from their younger days. Lawrence is currently considering an MBA or EMBA degree at an Ivy League business school. Not only could he add a world-class degree to his resume, but he could also make use of the extensive alumni network in the business world to broaden his connections.
A world-class degree has reassurances in terms of quality and recognition, but the school fees and living expenses can be considerable. For example, renting a flat in central Boston will typically cost around HK$20,000 per month. Hence, the estimated total cost for both him and his wife could add up to HK$1 million or more for two years.
Pursuing further education could also disrupt other plans. Spending HK$1 million to study abroad is a significant sum in itself, and that still has not taken into account the income you forsake during the year or so. The opportunity cost would not just be HK$1 million – it could easily be double the amount. Is it worth it? It's hard to quantify the answer. From a financial viewpoint, if you choose to continue working and invest the money set aside for your studies, you could see a return of 8% - 10% each year. This might be a larger return than any increases in salary.
Lawrence spent some time calculating the extent of his salary increases one day. He realized that he had enjoyed an 8% salary increase each year. The Hang Seng index has grown 12% each year, while a mover-and-shaker in the city reputedly sees a 17% increase annually. It's not surprising that Connie is worried.
Yet, studying abroad has always been Lawrence's dream If he could postpone his dreams for a year or so, he could use this time to put his finances in order by evaluating and adjusting his investment portfolio. Focusing on increasing his wealth would reduce the impact of his plan on the couple's future in the long run. They also need to evaluate their medical plans to handle unexpected fees arising from critical illnesses or hospitalization to prevent any reduction in their savings. With proper future planning, their dreams are easily within reach.
Special thanks to the case study provider: Financial expert: Simon Lee (Co-Director, International Business and Chinese Enterprise (IBCE) Senior Lecturer, School of Accountancy)
|Combined Savings:||HK$1.8 million|
|Combined Assets Value:||HK$2.2 million|
There are many factors to consider when pursuing your dreams: