Saving for kids university (hopefully!)

johng_uk

Where would be best to invest some cash for this? One of my kids is 8 and the other is 1.

I think I'd prefer a 'safety first' option and avoid stock market exposure, but any suggestions would be appreciated.

I have a lump sum to invest and would like the option to contribute monthly if possible.

jem16

As you are talking 10 years for one child and 17 years for the other, cash savings is probably not the best option as it will have the risk of inflation.

S&S ISAs could be used over this length of time - historically investments have done better then cash, especially over this period of time. It doesn't have to be all stock market exposure either as the investment would be tailored to your risk profile.

What kind of sums are you talking about here?

johng_uk

jem16 wrote: »

As you are talking 10 years for one child and 17 years for the other, cash savings is probably not the best option as it will have the risk of inflation.

S&S ISAs could be used over this length of time - historically investments have done better then cash, especially over this period of time. It doesn't have to be all stock market exposure either as the investment would be tailored to your risk profile.

What kind of sums are you talking about here?

I'm looking at £15,000 split between the 2. It won't be split equally as I want both of them to end up with roughly the same amount.

The monthly contribution would be small - No more than £25 each or so. This isn't vital either so even if the investment opportunity doesn't offer me the option to contribute monthly, I would consider it.

jem16

You could utilise funds from a funds supermarket like Hargreaves & Lansdown, starting off with some in an ISA and moving them in at a later date. You can also do monthly contributions but I think it's £50pm minimum.

You could also see an IFA for advice although the amount may be a little small for that but no harm in asking.

johng_uk

Decisions decisions!

I concur that the stockmarket offers potential for a beter return, especially with the timescales given. I am wary though as the economic climate isn't the best atm (although that can and will change over time), and I can't afford to lose any of the money really.

We will be looking to buy a house in the next 3 - 4 years once the market stabilises and with only one wage coming in, this money will need to be there in the future.

Life eh??

jem16

Your other option then is to use the highest interest savings account that you can find, although you will need to take into account tax - are you a basic rate or higher rate taxpayer?

Places like Kaupthing Edge offer interest at 6.5%.

Or possible make use of your cash ISA if you haven't already done so.

a7man

As long as you have a diversified portfolio and dont panic if the fund drops a little then in the timescale given it is highly likely you will make more money from asset backed investments.

The funds can then be moved into less risky investments closer to the time of withdrawal.

johng_uk

Jem - I'm a basic rate taxpayer and the Missus doesn't pay tax. This was the option I was thinking of - Not exciting I know, but the fact that she doesn't pay tax atm would bump up our % figure.

a7man - I wouldn't panic short-term and realise that the timescale is suited to stock market exposure. I couldn't really afford to lose any money though and would feel happier with bond/savings acct etc. I'm normally not averse to risk, but as this cash is for an important 'cause', I'm feeling a little more timid than usual!!

jem16

johng_uk wrote: »

I'm normally not averse to risk, but as this cash is for an important 'cause', I'm feeling a little more timid than usual!!

How about a mixture then?

The lump sum into investments and the monthly amount into savings?

Perhaps you need some help from an IFA to help you with the risk?

johng_uk

jem16 wrote: »

How about a mixture then?

The lump sum into investments and the monthly amount into savings?

Perhaps you need some help from an IFA to help you with the risk?

Yeah I think you may have hit the nail on the head. Split the capital into savings and investments. A visit to an IFA will be on the cards at some point I reckon!

TVM for the advice