Save £300/month x 10 years - Best Option?

wacjac

Hi all,

My wife and I are looking to start saving a fixed amount of £300 each month over the next 10 years (circumstances permitting of course!) towards our 1 year old daughters future education (11-18 years of age). We would not need access to this money at all during the term, neither would we require life insurance cover etc..

What are good low-medium risk options for doing this - obviously with maximum return?

I'm certainly no expert when it comes to the minefield of ISA, Bonds, Equities and other savings types.

I do have my financial advisor (independent) coming out to see us next week but would like a few things to discuss in greater detail with him

All advice gratefully accepted.

Thanks

Rafter

Whatever you do avoid special school fee savings plans. The commission and charges on these can be really high and wipe out a lot of your income.

I'd suggest some sort of tax efficient investment such as and ISA or National Savings.

If you are prepared to tie up the money as you suggest, you should be able to get the best return from a stocks and shares ISA rather than cash, but there is a risk that stocks can go down as well as up, although over 10 years this is unlikely and as you are saving regularly the risk is smaller.

An IFA may try and sell you a unit trust ISA with up front commission. It may be cheaper (and lower risk) to go for a low cost tracking isa with low management charges, rather than risk the performance on one particular supplier and how good the fund manager is at picking winners and losers.

Good luck.

R.

dunstonh

An IFA may try and sell you a unit trust ISA with up front commission.  It may be cheaper (and lower risk) to go for a low cost tracking isa with low management charges,  rather than risk the performance on one particular supplier and how good the fund manager is at picking winners and losers.

Some IFAs do unit trust and OEIC ISAs with no up front commission.    ;D

Saying it is lower risk to go for a low cost tracking ISA is incorrect.   There are lower risk funds available (such as corporate bonds, fixed interest and property).  If I was to make such a claim, I would be facing a fine.

Putting all your savings into one fund is also not considered good financial advice any more.   The UK stockmarket historically appears as top performance sector once every 5-7 years.  Therefore with a UK tracker fund, you could find yourself in the top area once, maybe twice in that 10 year period.  

Research has shown that the right mix of asset types creates 94% of long term investment success.  Stock selection contributes 4% and timing only 2%.

So a spread of investment areas within the ISA to average out and match the risk attitude of saver is a more sensible approach.

Whatever you do avoid special school fee savings plans.  The commission and charges on these can be really high and wipe out a lot of your income

Potentially correct but again, you cannot make a blanket statement like that as modern charged plans are better value than those of 5-10 years ago.  Plus, a higher rate tax payer may find these plans tax efficient if they have already used up their ISA allowances.

wacjac

Thanks for the replies chaps...

Does the timing of the IFA's commission have a direct impact on my accumulating fund then? Is it an ethically acceptable question to be asking of the IFA?

Do I really need the assistance of an IFA to make this decision? ... in other words does anyone have to benefit from my investment choice?

dunstonh

Thanks for the replies chaps...

Does the timing of the IFA's commission have a direct impact on my accumulating fund then? Is it an ethically acceptable question to be asking of the IFA?

Do I really need the assistance of an IFA to make this decision? ... in other words does anyone have to benefit from my investment choice?

The ISA provider will take an initial charge which in part feeds the IFA.   If no commission is taken, the initial charge is reduced or wiped out in some cases.

If you want to do it yourself, there are websites offered by a number of IFAs that take no initial charge allowing you to do it.   Be wary, not all online sites will be commission free.  Doing it direct doesnt always mean commission free as the providers will often take the ifa chunk for themselves. Fees should always be disclosed, even when there isnt any.

You dont need an IFA at all to make a decision.   If you think you need advice and periodic performance reports
then use an IFA.  If you want to do it all yourself, then do it yourself.