Invest for Education

It’s easy to think that you’ll have enough money in the future to pay for things like school
and university fees from cash flow. But the reality is, as we get older we build up our financial
commitments and you may wish that you had saved for these costs earlier. What better gift
to your children or grandchildren than a top-class education?

EDUCATION

"The earlier the better"

Time to build

When you’re investing for education, the first thing you need to ask yourself is what time horizon do you have to build up a savings pot for your child’s education costs.

A rule of thumb

If your child is young or not yet born, you likely have a near 20-year window in which to build up a pool of funds to pay for the rising cost of school or university fees. The financial cost of raising children to the age of 21 is estimated to be more than £220,000 and education is the largest chunk of this cost.

You will also need to factor in the type of education your child will have before they enter university – such as private schooling or state-funded education. However, the costs down either route mount up.

Time horizon:

Our model portfolio and goal-based fund selections have time horizon and risk level guides to help you choose the right investments for you.

Junior ISA

Fortunately, there are a number of options available for parents looking to put money away for their offspring’s education.

One option is opening a Junior ISA, which allows a tax free allowance of £3,720 to be put in a cash or stocks and shares Junior ISA each year. The downside of this option is that once the child turns 18, the money becomes theirs and they can do what they like with it.

Children’s Bond or Investment Account

Another option is a National Savings & Investments (NS&I) Children’s Bond or Investment Account, backed by the Treasury. A current five year Children’s Bond requires a minimum investment of between £25 and £3,000 and offers 2.5 per cent interest with a 90-day interest penalty for early access.

Level of risk:

Our model portfolio and goal-based fund selections have time horizon and risk level guides to help you choose the right investments for you.

Like all life events

Parents should be careful that saving or investing money in their child’s name doesn’t trigger a tax liability. If the interest of any financial gift is greater than £100 in a year, the parents will be charged at their income tax rate on the excess interest.

Investing for a child’s education is no different to investing for any other life event. It is dependent on the individual’s circumstances, income, debts, capacity for loss, risk appetite and expectations for the future. All of these factors must be considered when selecting an avenue to invest for education costs.

Solutions

We have assembled some links around this page that are relevant to investors looking for solutions to their cost of education needs, whether they be ready made solutions or 'pick your own' investments.
"Start exploring!"

School Fees Funder

Goal based selection

Aggressive growth to build a capital sum.

Suited for Parents and grandparents looking to save over the medium term for education fees.

VIEW SELECTION

VIEW ALL GOAL BASED SELECTIONS
 

Goal based selections

School fees funder

Aggressive growth over 10 years.

The Mortgage Buster

Medium term wealth over 20 years.

Retirement Booster

Building capital — long-term SIPP

Regular ISA Saver

Build capital, no tax up to £1,666pm

IDEAS TO GET YOU INVESTING

What kind of investor am I?

My Attitude to Risk

What level you are comfortable with?

My Time Horizon

Never too early to start investing

My Financial Position

What investment phase are you in?

My Goals

Set realistic goals & achieve them.

SOME HELPFUL TIPS
Threadneedle’s Nangle: Why I’m going overweight equities

Threadneedle’s Nangle: Why I’m going overweight equities

by Anthony Luzio
15:00 - 26 May 2017

Editor, Trustnet Magazine
READ FULL ARTICLE

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