Wealth Check: Can I do an MBA and save for a house as well?

A recent graduate has ambitious plans to save up for expensive postgraduate study and buy property in Nigeria – both within four years. Maryrose Fison reports

The patient

Twenty-two-year-old graduate and trainee accountant Obiocha Ikezogwo is keen to get a handle on her finances so she can realise her dream of doing an MBA and purchasing a property overseas. Having grown up in Nigeria, Obiocha would like to reconnect with the place she calls home and get her foot on the property ladder there within four years. She feels that having an MBA will boost her business skills and help her to build a business in Nigeria in the future.

With an annual salary of £24,700, her main outgoing is her accommodation in Wallington, Surrey, where she shares a three-bedroom house with her father, paying £480 a month rent.

The cost of doing an MBA will be quite substantial, as the courses she would like to apply for cost in the region of £42,000 for a full-time two-year course. But Obiocha is in a relatively good position in that her father has generously committed to pay up to half the fees. She is also prepared to apply for sponsorship and grants to help make up the remaining £21,000.

Her dream of buying a property in Nigeria would be initially for a rental income, and she is aiming for a three-bedroom house in Lagos, ideally around the Lekki or Victoria Garden City suburbs.

The cure

With no student loan or credit card debt, a well-paid graduate job and a manageable monthly rent, Obiocha is in a good position to start saving. But if she wants to begin an MBA course within four years and take out a mortgage on an overseas property, she will need to begin putting a sizeable chunk of her monthly earnings away regularly, and consider an additional part-time job if she doesn't extend her timeframe.


In order to save enough money to do an MBA, Obiocha will need to keep a watchful eye on her outgoings. Dennis Hall, managing director of London-based Yellowtail Financial Planning, says this will be crucial if she is to save enough money for the course within four years. "Budgeting is a skill that everybody should acquire as early as possible," he says. "Having an understanding of her personal financial cash-flow will help Obiocha as she seeks to achieve her goals."

Mr Hall calculates that she will need to save £437.50 per month if she is to save up £21,000 within four years but she could maximise her savings by putting the money into a cash ISA.

"This level of savings fits within the current cash ISA limits and a cash ISA would be the ideal place to start regular savings because the interest will accumulate tax free," he says. Another alternative would be to open up a monthly savings account with her bank, HSBC. "Depending on the type of HSBC account Obiocha has, she may be able to open a monthly savings account with an interest rate of between 4 per cent and 8 per cent for the first 12 months. This is not an ISA, so the interest would be taxable, but the rate is better than most ISAs."


With Obiocha's limited savings and the possibility of not attracting sponsorship, the financial planners feel she may need to rethink her timeframe. Mike Stafford, a certified financial planner and partner at Hertford-based Stafford and Co, suggests Obiocha consider deferring her purchase for a further few years so she can raise sufficient capital. "The combination of an MBA fund and the house purchase fund looks unlikely to be achieved in the four years, so she may have to defer her purchase for a further couple of years," he says.

Before committing to a property purchase, he recommends she consider the type of mortgage she may be able to secure and the level of capital she will need to obtain this.

"Obiocha will need a mortgage to assist in the purchase of her property and the maximum advance she is likely to get is 80 per cent. The type of property she is interested in is likely to cost in the region of £120,000 in today's terms. This means she will need to raise a 20 per cent deposit of about £24,000," he says. "As she is not a resident in Nigeria, she will be advised to open a Non-Resident Nigerian (NRN) account at a mortgage company there and she will need to have serviced that account for at least six months to qualify for a mortgage."


As Obiocha has a considerable amount of capital to accumulate in order to achieve either of her financial goals, she will need to maximise her savings as much as possible. Mr Stafford recommends she takes this into consideration when choosing whether to begin saving into a pension as well.

"Now is not the time to start investing in a pension plan," he says. "However, the terms of her employment may require her to contribute to a company pension scheme. In due course, when she sees that her two main priorities are being accommodated she might consider pension planning. If she stays in the UK, she will benefit from compulsory employer contributions under the proposed Nests workplace pensions scheme."

However, the financial planners feel Obiocha shouldn't leave pension saving too long. Each pound saved under the age of 30 is worth £3 saved in her fifties because the pension investment has much more time to grow and benefit from the initial tax relief given.


While the prospect of contracting a serious illness is unlikely to be at the forefront of the mind of a twenty-something, Obiocha should consider the potential value of taking out critical illness insurance now when she could have access to better rates.

Alok Dhanda, managing director of the Newcastle-based financial planning firm Dhanda Financial, says he has on more than one occasion seen a client in their twenties who has been struck down by a serious illness and needed this kind of financial support.

"Obiocha is in a great situation as she is single, young and healthy, so there aren't too many demands on her finances. This is the perfect time, then, for her to set up a critical illness policy, as it will be a lot cheaper now than when she grows older," he says.

He also suggests Obiocha consider a "whole of life policy", which would protect her and any children or dependants she has in the future, regardless of her country of residence.

"For £17 a month, she could provide added protection, not only for herself, but for any family or dependants she may have in the future. By opening a policy now, Obiocha can already start accumulating wealth to pass on to children while she is still in the UK, and if she ever moved back to Nigeria, the policy would continue."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Suggested Topics
Danny Cipriani of England breaks clear to score his second try
Arts and Entertainment
tvSPOILER ALERT: Like a mash-up of 28 Days Later, Braveheart, The Killing and Lord of the Rings, this GoT episode was a belter
Life and Style
Angel Di Maria is shown the red card
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Payments Operations Assistant

    £23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

    Recruitment Genius: Telephone Debt Negotiator

    £13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

    Guru Careers: Communications Exec / PR Exec

    £25 - £30K: Guru Careers: We are seeking a highly-motivated and ambitious Comm...

    Guru Careers: Pricing Analyst

    £30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

    Day In a Page

    On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

    On your feet!

    Spending half the day standing 'reduces risk of heart attacks and cancer'
    Liverpool close in on Milner signing

    Liverpool close in on Milner signing

    Reds baulk at Christian Benteke £32.5m release clause
    With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

    The big NHS question

    Why are there so few new GPs when so many want to study medicine?
    Big knickers are back: Thongs ain't what they used to be

    Thongs ain't what they used to be

    Big knickers are back
    Thurston Moore interview

    Thurston Moore interview

    On living in London, Sonic Youth and musical memoirs
    In full bloom

    In full bloom

    Floral print womenswear
    From leading man to Elephant Man, Bradley Cooper is terrific

    From leading man to Elephant Man

    Bradley Cooper is terrific
    In this the person to restore our trust in the banks?

    In this the person to restore our trust in the banks?

    Dame Colette Bowe - interview
    When do the creative juices dry up?

    When do the creative juices dry up?

    David Lodge thinks he knows
    The 'Cher moment' happening across fashion just now

    Fashion's Cher moment

    Ageing beauty will always be more classy than all that booty
    Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

    Health fears over school cancer jab

    Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
    Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

    'I forgive everyone, but I don't forget'

    Fifa president Sepp Blatter issues defiant warning to opponents
    Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

    Weather warning

    Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
    LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

    High hopes for LSD

    Meet the volunteer users helping to see if it cures depression and addiction
    German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

    Saving Private Brandt

    A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral