HOW TO ESTABLISH A SCHOLARSHIP FUND – CAN THIS COUPLE MAKE THEIR DREAM OF CREATING A $200,000 ENDOWMENT FUND A REALITY?

Money Sense – By Julie Cazzin

The current situation:

Justin Langlois, 30, and his wife, Danielle Sabelli, 29, recently moved to Vancouver. He’s a professor at a local university, while Danielle, who is currently articling at a law firm, plans to open her own practice when she finishes in a year’s time. Together, the couple earns about $100,000 annually but expects to increase that to $130,000 in a couple of years. Their only debts are a $297,000 condo mortgage and a $5,000 RRSP loan—obligations they’ll have no problem paying off as they don’t plan on having any children. “Post-secondary school was a good investment for us,” says Justin. “We want to support other students who want a good education but don’t have the money.”

That’s why the couple has a unique goal. They’d like to set up an endowment fund that would give out scholarships annually to a few civic-minded students. They’ve just started contributing $100 a month to a savings account and hope to contribute $10,000 or so annually starting in two years. By 2029—or 15 years from now—they’d like to have at least $200,000 in the plan, or enough to fund two to five scholarships totalling about $15,000 a year in perpetuity. Are they on track to do so?

The verdict:

Justin and Danielle will not meet their goal of saving $200,000 in 15 years if they contribute only $10,000 a year. “Assuming an annual rate of return of 4%, they’ll have only $170,000,” says Ian Black, a fee-only adviser with Macdonald, Shymko & Co. in Vancouver. “They’ll be $30,000 short.” Click here to read the rest of the article.

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