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Saving for Education Fees

By: Kevin Dowling BA (IMC) - Updated: 15 Oct 2012 | comments*Discuss
Child Saving Education Invest Fees

Parents are finding it increasingly difficult to pay for their children’s education. It is estimated that private schooling can cost over £100,000 in fees.

The costs escalate as the child gets older and gains a place at university. Student grants have long since been abolished and been replaced by loan schemes, where the student has to repay the borrowings once they start earning. Research from the National Union of Students has shown that the cost of attending university on a three-year undergraduate course could cost in the region of £32,000.

On average, most graduates will find themselves facing a debt of £20,000. Parents considered as being wealthy are now expected to meet tuition fees and a large proportion of living expenses.

However, with a bit of forward planning and some sound financial advice, you can create a savings programme that will allow you to fund your child’s education without saddling you with a mountain of debt.

Funding School Fees

As with any investment, the sooner you start saving, the better off you’ll be. For several private schools, you need to register the child as soon as they are born in order to guarantee a place. So why not start saving while they’re young too? if you invest when a child is born, you could have 18 years to build up a sizeable investment on their behalf.

Provided that you have a long period in which to save, your best option would be choosing an investment vehicle designed to generate strong performance over the longer term.

Use your ISA Allowance

Whatever you are saving for, you should always take whatever tax breaks the Government is willing to hand out. Individual Savings Accounts (ISA) are the first types of savings vehicle you should be thinking about, especially if you are planning on saving over a long time period. You can invest up to £7,200 each year, in a combination of cash or shares, and you can transfer your ISA investment from one provider to another if you wish.

Collective Investment Schemes

This is a term that applies to a number of differently structured investment products that make money from investing in companies listed on the stockmarket. Of course with investments such as these, there is a greater risk involved than investing in cash or bonds - their value can go down as well as up. The real benefit of this type of investment is that the longer you stay invested the greater the possibility of real growth of your money.

OEICs and Unit Trusts

The most popular collective investment schemes are OEICS and Unit Trusts. Both are funds where individual investors purchase shares or units in a fund, along with other investors. The money is pooled together to buy equities or bonds, and the profits made on these investments are then divided back among the investors. Investors can choose from a wide variety of different funds from different product providers. Each fund will have its own performance objective, and will state the type of assets they choose to invest in and the level of returns they hope to achieve. Performance is not guaranteed, but if your investment doesn’t reach the required level to meet your needs, it is a simple process to switch to an alternative fund that you consider to be more suitable.

Investment Trusts

Although less popular than OEICs and Unit Trusts, Investment Trusts are also very useful investments for people who are looking for a long-term stable home for their money. Despite the name, Investment Trusts are companies listed on the stock exchange, but their sole purpose is to invest in other companies. Investors can purchase shares in the investment trust, and dependent in the performance of the companies they invest in, they can take profits in the form of dividends, as well as hopefully watching the value of the trust rise over time.

Investing for your children’s education may sound like a daunting prospect. However, the sooner you get started, the easier it will be. Start saving early, and you should be able to pile up a fairly handy sum of money by the time your children are ready to embark on their next big adventure.

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