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Raising The School Fees Finance


So what are the options? Cash-based savings accounts will deliver minimal returns in the current high infl ationary, low base rate environment. So those looking for higher returns over the medium to long-term may need to speak to their fi nancial adviser about considering some form of equity based investment – it is simply not viable these days to stick with the "safe" option of cash. The alternatives can take the form of


investments in Stocks & Shares, Investment Funds, Unit Trusts, Open-Ended Investment Company (OEICs), Investment Trusts or ISAs.


Save regularly – pound cost averaging One way investors can minimise the impact of market volatility is to save regularly into an investment fund, rather than investing a lump sum in one go. The other is to adopt pound cost averaging where you can set up a direct debit and invest an identical amount in it each month. Schemes operated by some fund management groups make this an easy process. If prices fl uctuate sharply, you buy more shares when prices are low and fewer when they are high.


ISAs


The benefi t of an ISA is its tax free status, which allows each parent to invest up to £10,680 per year, £5,340 of which can be invested into a cash ISA, or the whole amount in shares. Over time these amounts add up and will go a long way towards school fees. Investments must be made each year before 5th April and unused allowances don’t rollover into the following fi nancial year. The


Over time these amounts add up and will go a long way towards school fees


benefi t of an ISA is that you can access the money whenever you like, without losing the tax benefi t of any gains made on your investment. Again, your fi nancial adviser will be able assist in setting these up.


Junior ISAs


There will soon be another addition to the ISA stable – the Junior ISA, which replaces the Child Trust Fund (CTF), and has been closed to children born on or after 3rd January 2011. These new tax-free children’s savings accounts will be available from 1st November 2011, however, unlike CTFs, the Government will not make any payments into the new accounts.


www.fi rstelevenmagazine.co.uk Autumn 2011 FirstEleven 53


So with less than a month to go before


the formal launch of Junior ISAs, parents (and grandparents) have another opportunity to use a tax-free wrapper to invest up to £3,600 per year on behalf of their children. However, because the accounts will not be accessible until the child is 18 years-old, these are better suited to paying for higher education tuition fees. Where possible, we would encourage parents to use their family’s full annual ISA entitlements as a means to save for all levels of education.


Start early – seek professional advice So at a time when we are all tightening our belts, it is more important than ever that those considering paying for private education seek professional advice and start to invest as soon as possible. As with a pension, you can never start saving soon enough and the diff erence between somebody starting to save for education when their child is born, compared to somebody who starts when their child is fi ve year-old can mean a diff erence of thousands of pounds.


James Rainbow is Head of Marketing UK, Schroders 1 = Independent Schools Council, Sept 2011 2 = Schroders commissioned ICM to conduct a survey with 2016 adults aged 18 + between 18th-20th May 2011.


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