Money matters – so make the most of yours
Going to university – how to plan for the cost
As the new university term starts, certified financial planner Robert MacDonald discusses how to fund such an important phase in a young person’s life.
Some stages of a child’s life are widely recognised as being more significant than others. And often these stages – such as welcoming a new baby home, the first day at school and moving to secondary – bring with them additional financial outlay.
After secondary school, university signals a new chapter in many young adults’ lives. With this transition into a new chapter of learning,
often residential, there are several costs to consider, from board and lodgings, travel, books, computers and stationary items to name but a few.
If the student chooses a course that is south of
the border, tuition fees of more than £9,000 a year will place even more pressure on parents already concerned about the cost of their children’s education. According to research by the Association of Investment Companies, almost a quarter of parents (23%) are expecting to use most of their life savings to help their children through university. More than a third of parents think it’s likely their child will live at home while they are studying in
order to save money. However, even if they do, half of parents still expect their child to graduate with more than £20,000 of debt. Very few people are in a position to save the huge sums needed to put their children through further education, but even putting a little away each month can help ease at least some of the strain. Here, we look at some of the options, depending on how long you have to before your children reach higher education.
42 | Clyde Life – September/October 2013 The luxury of time is helpful - if you have five or
more years to save and you have an appetite for risk, then you may want to consider investing into stocks and shares rather than a cash savings account. Although developed markets continue to be volatile due to ongoing Eurozone issues, over the medium to long term, historically stocks and shares tend to outperform deposit accounts. Collective investments such as unit trusts, Open Ended Investment Companies (OEICs) and investment trusts can help to dampen volatility and, depending on the amount you need to invest, a stocks and shares Individual Savings Account (ISA) should be considered. Five years is the minimum time, (and preferably longer than that) needed before you consider an investment that has an element in shares. Currently, HMRC allow an investment of £11,520 per annum in an ISA so if both parents used their allowance they could save double this together. If there is no appetite for risk, the parents should consider the cash ISA entitlement that for the current fiscal year is £5,760 each with any remaining disposable amount saved into the highest deposit account available.
@clydelifemag
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