How can you safeguard your child’s or grandchild’s future?
- Written by Daniel McGonigle
A first-class education is one of the most valuable gifts that parents or grandparents can give to children. Whilst this may well be one of the most valuable gifts it is also one of the biggest financial commitments a family can make. Costs are substantial and have tended to rise way above inflation; education fees on average are rising between 5-7% per annum.
The cost for private school in the UK is between £10,000 to £25,000 per annum, depending on where the school is located and whether you are boarding or not.
In Portugal the cost for an international school is between €3,500 and €10,000 per annum.
So how much do you need to save?
Typical example: If you were to take a fairly typical UK school with a per annum fee of £10,000 and assume inflation of 5% per annum, then the total cost over 14 years of sending one child to junior from age 4 and senior school up until 18, not including university is almost £280,000 (or £277,190 to be exact!).
It was announced recently that Universities in England will be able to charge tuition fees of up to £9,000 per year from 2012. The government is significantly shifting the responsibility of further education to students and/or parents. Recent research in the UK suggests that university students owe an average of £23,500 upon graduation, it is feared with recent government cuts and proposed increases in university fees that debt levels will continue to rise.
The good news is that inflation over the years of education plays a major part in creating that daunting total of about £280,000 to fund your child’s or grandchild’s education. So the cost in today's money is substantially lower. So planning today whilst you still have time on your side will significantly lower the financial burden of education fees.
So how can you help to secure your child’s or grandchild’s future?
• Do nothing and pay the fees from your income or existing savings.
• Investing regular amounts in a savings plan to pay part or all of the education costs in the future.
• Invest a lump sum perhaps via an offshore investment to generate an income to pay education fees today, or create investment growth to pay fees in the future.
• Re-assign existing life policies and investment bonds to a child or a grandchild.
• Set up a family trust with part or all of your estate creating a tax efficient way to pass on your wealth, without paying inheritance in UK and overseas.
When should you start saving for private school fees?
Forward thinking parents or grandparents should start saving as soon as they can, even if you don’t have children yet it’s never too early to start planning. The longer the investment period, the more likely the fund will grow without too much strain on the household expenses. Even if you have a change of heart about private school or your child decides not to go to University the money you have saved is never wasted. There are many things in which the money could go towards, a wedding, buying their first property, a car or even if not spent on your child, it could act as a pension top up or go towards a second home.
There are hundreds if not thousands of financial instruments available so deciding which solution is best for you can be laborious, confusing & time consuming. It’s important to find a qualified financial advisor who is independent and can provide you with unbiased advice. So why not act now and safeguard your child’s or grandchild’s future?
You can contact me Daniel McGonigle, Managing Partner at WorldWidebroker on (+351) 91 279 2998 or daniel@worldwidebroker.pt .
W: http://www.worldwidebroker.pt/contact2.html
The financial advisers trading under WorldWideBroker Portugal are members of Nexus Global (IFA Network). Nexus Global is a division of Blacktower Financial Management (International) Limited (BFMI). All approved individual members of Nexus Global are Appointed Representatives of BFMI. BFMI is licenced and regulated by the Gibraltar Financial Services Commission (FSC) and bound by the rules under licence number FSC00805B.
