Saving for our daughters education...

Dempers

Hello everyone!

My wife and I have decided to start putting away some money to pay for our daughters future education needs. She's 11 months old and we thought of starting her savings on her 1st birthday.

So far, quite simple...

However, I was trying to figure out how to maximise our saving power when I got stuck!

These are the numbers I'm working with;

Amount to save per month: £200
Length of time to save for: 15 years
Estimated average interest per year over the period: 3%
Estimated inflation over the period (per year): 2%

Unfortunately, we will also have to pay the higher rate of tax on the interest earned.

I was thinking of starting an account offshore to avoid the tax on the interest, but wasn't sure if this was actually legal....

Any thoughts/tips/hints most welcome!!

Thanks
D

opinions4u

See an IFA.

It's a decent sum over an extended period and you want to maximise the potential returns within your risk profile.

These guys will utilise the tax breaks, child trust funds etc.

Keeping money offshore is legal. Failing to pay tax on the interest earned is very illegal!

baby_boomer

Well it would be tax free for you in a Child Trust Fund - which would be accessible by your daughter on her 18th birthday.

The maximum monthly savings into this would be £100 pm = £1200 pa

And if you wanted some money available at 16 you could save the other £100 pm separately.

Dempers

I was hoping to avoid setting up a meeting with an IFA (I travel extensively and am rarely home for these things)... Might not be a bad idea though!

The Child Trust Fund isn't an option as the money wouldn't be controlled by us, but rather by the child (also, there's no flexibility in how the money is invested)...

How could it be illegal to not pay interest on money that has never entered the UK...?

baby_boomer

If you want to control the money beyond her 18th birthday then you don't have any worthwhile tax free options apart from ISAs. Setting up a trust fund until she was 25 would be very expensive and certainly not worth it on £200 pm.

Re your last question, you are a UK resident and therefore liable to UK tax.

baby_boomer

Do you mean mutual funds in the US sense = UK unit trusts

Or UK mutual funds = tax-free but commission heavy, underperforming UK friendly society investments which should be avoided at all costs?

I think you might be on the wrong continent!

BruceyBonus

conancare wrote: »

kotaksecurities.com

India? This is a UK website.

opinions4u

Dempers wrote: »

I was hoping to avoid setting up a meeting with an IFA (I travel extensively and am rarely home for these things)... Might not be a bad idea though!

You're talking about your child's future. I think you can find a couple of hours somewhere in your schedule. Over 15+ years decisions made now and reviewed every year or so can maximise what you provide for that future.

The Child Trust Fund isn't an option as the money wouldn't be controlled by us, but rather by the child (also, there's no flexibility in how the money is invested)...

A well raised child will use the money responsibility. There are numerous different funds available. An IFA will help you to determine the suitability, or otherwise.

How could it be illegal to not pay interest on money that has never entered the UK...?

If you are classed as a UK taxpayer, Mr Darling can tax your income anywhere in the world. Another reason for using an IFA.