Pay school fees in advance or invest money??!

ameliab1909 wrote: »

Hi there
Am really keen to get some views on this..
Got two sprogs in private school. The school are offering 2-3% discount for fees paid in advance (2 years fees = 2% off, 3 years 2.5% off, 4 years 3% off).
We have got £117,000 which I think would just about be enough to scrape the 4 years and therefore attract 3% discount.

My question is - would we be better investing that money or handing it over to the school???? I like the idea of not thinking about fees for 4 years! If we invest it there are tax implications I imagine and we need access to it at least once a year to pay fees (you can pay annually).
Am feeling very confused and overwhelmed at all the options??? I see fixed bonds but they are only offering 0.75-2%.
also worth mentioning that £88,000 of that £117,000 total was a remortgage and costs us £200 a month already. Paying most of it back is also an option????
Any help/advice greatly appreciated..

Do they have to go to private school? You would save yourself a huge amount of money. If your kids are smart and you can give them the time to encourage them they can do as well or better than private school kids with the correct support.

ameliab1909 wrote: »

We didn't decide lightly to go private but its the route we have chosen and will stick with..

Fair enough. We decided against private, but are now supporting 3 through university which is costing a small fortune. They all got A*, A's and the odd B at A level and are getting Firsts at Uni (Russell group). So it is possible to survive a comp, I suppose it depends where you are in the country and in your town. In a good comp I would say around 10% or so of the kids really excel, I admit they have to as I would agree that comp facilities and not as good as private. I understand why people don't want to risk sending their kids to comp schools as the probability of success is statistically higher with private schools, but on the other hand I have seen some real duffers come out of private school. Best of luck, we all want the best for our kids.

To answer your original question if you have no other cash available and you wish to guarantee their places for the next few years you might as well pay up, you could try it on and ask for a couple more percent?

You might look at P2P, there are a few accounts that have provision funds and in all probability you probably wont lose capital (but it is possible to lose capital) these products from the likes of ratesetter, zopa and assetz capital pay around 3% and have instant access. I use these as near cash bank accounts but I have substantial assets elsewhere.

Alternatively, pay off the mortgage and arrange with the lender some kind of offset saving facility where you can withdraw cash each year to pay the fees. I would be cautious however as if you have anything other than a fixed rate your payments will increase if/WHEN interest rates start to rise.

Can you not pay the fees out of salary on an ongoing basis and pay down the mortgage?