Education Funding
Like most parents, you want to give your children the best education you can afford. Unfortunately, a good education is expensive, and the costs are forever rising. Certainly, very few people are able to pay one or more sets of fees out of their regular income, without setting aside money beforehand. If you start a regular savings plan now, you'll better secure your child's education, since the plan will have time to accumulate and grow.
However, there's no blueprint for planning your child's school-fees, and there are several savings plans and other methods of accumulating capital to choose from. The following is a brief outline of some of your options:
Composition fees schemes
For risk-sensitive parents who are keen to have the fees guaranteed and who have capital to invest, many schools operate composition fees schemes, whereby in return for a lump sum paid in advance, the school will give a reduction on the fees. The earlier the capital is handed over, the bigger the reduction is likely to be.
Shares (equities)
(As mentioned in the report, this info is out of date and needs to be updated)
For those who are prepared to take a greater degree of risk, equities could be used for more distant fees, and cash-based investments, such as offshore building society deposits, for more imminent fees. The problem at the moment, of course, is that equities have been in free fall for the past three consecutive years, and interest rates currently are so low as to hardly make a difference.
As regards equities, time in the markets is the key to success. It would be unwise to consider investing in equities for this purpose over any less a period than five years, although ten years would be better.
Regular Savings Plan
The most flexible and lowest-cost route is to set up a regular savings plan with an offshore fund management company. There is really no need to pay extra charges for an expensive life assurance wrapper. By using this route you retain control and can alter your contributions to suit your requirements. When the educational fees fall due, you simply cash in sufficient units to cover the amount required.
We'll select the underlying funds according to your attitude to risk, although we would generally recommend a balanced investment strategy, as you don't want to see your child's school fees fund decimated by poor market conditions.
The possibilities and options are endless. We're happy to give you professional advice to guide you through the maze of choices. But the key message is: It's never too early to plan ahead!
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