Dec/10 - Funding for student fees
This month’s hot topic focuses on the hot political potato of student fees. I don’t need to repeat all that has been reported recently, suffice to say that it is going to cost a lot more for your child or grandchild to go through university than it did previously.
Long term planning can help to mitigate this cost
A simple solution is to start a regular savings stocks and shares ISA and earmark the proceeds for future student fees.
Saving a regular monthly amount and exposing it to the stock market over the medium to long term should provide you with a much better return than if you saved the same amount in a deposit based account.
If you already use your ISA allowance each year then there are other long-term savings plans that will allow access to equity funds that, as said previously, should provide a better return than deposit accounts.
Other Alternatives
For periods of 10 or more years there are good tax efficient savings plans that will help you to build up a fund towards university fees.
If your child or grandchild is already in their teens then it may be too late for a monthly savings plan to provide the necessary funds.
An alternative solution in this instance, especially for grandparents, could be to invest existing savings into an investment bond that can then be placed in a Trust with the grandchildren as possible beneficiaries.
You can keep control of this as you can appoint yourself as a trustee that will allow you to assign funds to cover the university fees.
This is also useful as an inheritance tax planning tool as the funds placed in the trust can be removed from your estate.
If, after putting these plans in place, your child or grandchild decides that university is not for them then you can always use the funds to help them in other ways:
It is much more difficult for first time buyers to get a foothold on the housing ladder, a reasonable deposit will always help. You can provide this.
They may want to set up their own business and funds are always useful for equipment purchase, marketing etc, and again you can use the “university fund” to help with this.
The above solutions are not technical or complicated, I am sure you have considered the same solutions.
I can help you with the actual fund choices that will help you get the best return for the level or risk that you are prepared to take. I also have access to the whole of the market so I will be able to recommend a suitable provider that has good products with competitive charges.
If you would like to arrange a meeting with one of our Advisers to discuss how we can help you please contact us.