kids uni fees sanity check and a question...

I have 7 years until my daughter goes to uni and I want to help out.. nto saying I'll cover the full cost just help as much as I can.

I am looking to invest £250 a month for the next 7 years.

I figured I would open an isa and invest in the HSBC FTSE 100 and 250 index in equal amounts.

However - I am not sure of the isa to choose.. the HL has a £2 platform fee and if my reconing is right that is a 0.8% charge on the £3k a year invested.

Is the plan sound based on the timeframe and is the HL isa the best/lowest charged one?

thanks for any time you spend replying.
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  • edited 26 September 2012 at 3:01PM
    chucknorrischucknorris Forumite
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    edited 26 September 2012 at 3:01PM
    I have 7 years until my daughter goes to uni and I want to help out.. nto saying I'll cover the full cost just help as much as I can.

    I am looking to invest £250 a month for the next 7 years.

    I figured I would open an isa and invest in the HSBC FTSE 100 and 250 index in equal amounts.

    However - I am not sure of the isa to choose.. the HL has a £2 platform fee and if my reconing is right that is a 0.8% charge on the £3k a year invested.

    Is the plan sound based on the timeframe and is the HL isa the best/lowest charged one?

    thanks for any time you spend replying.

    I opened a ftse 100 tracker years ago with the Halifax (1% fee) but then started up an all share ftse tracker with fidelity because it only has a 0.1% fee (although I think overall it might equate to 0.3% perhaps someone more clued up on this type of product could explain better).

    I know it is a long way off so probably far too early to mention this but I am a university lecturer and some of our students start in our second year after completing an HNC or HND. I think that pattern will increase as those courses are a cheaper alternative to the first year of the university.
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    I've started running again, after several injuries had forced me to stop
  • thanks for the info on the HNC/D courses.. certainly interesting in todays climate - as you say though - who knows what the score will be in 7 years.

    the HSBC tracker has an effective management charge of 0.27% so its nice and low, its just I wish to wrap it up in an ISA and they bring their own charges.. that's what I'm curious about.

    Also am I being to risk averse for my 7 year investment period...
  • nicknamelessnicknameless Forumite
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    Please don't take this as advice as I am no expert and only just starting up investing myself.

    Firstly, if you have or are willing to open a HSBC current account, and want to invest in HSBC products their Global Investment Centre is a possibility to invest via.

    Secondly, I would expect others to point out that investment in 2 trackers in the same market with overlap in exposure to risk (and all in equities) over a relatively short timespan is not a risk averse strategy as there is no diversification (if the FTSE plummets so does your capital).

    HSBC offer a number of trackers for equities across the globe via the global investment centre if you wanted to use that to diversify. Whether those are the cheapest or best options I can't comment.

    I think you'd be asked to specify your risk tolerance (is this a punt to help out or must you have most of this capital available after 7 years) as a starting point as well.

    Good luck - and I'll let the experienced give their sage wisdom :)
  • jimjamesjimjames Forumite
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    If you are starting from scratch then HL isn't the cheapest option as you'll be paying £4 per month fees even when you only have £250 invested.

    If you want the cheapest route then direct to HSBC or using Cavendish/FUndsnetwork is likely to be a better option.

    I'd agree with the previous post that you need to consider the funds you use. We use F&C for our childrens savings plans as their trust has worldwide remit giving a bit more spread of risk.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • JimmyTheWigJimmyTheWig Forumite
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    I have 7 years until my daughter goes to uni and I want to help out.. nto saying I'll cover the full cost just help as much as I can.
    Obviously things may change, but thought I'd point out that with the current rules it is worth the students borrowing as much as they are allowed to pay for their fees and living costs. If they need help on top of this then it's great that you'll have money there for her. If not, this money might be better used for a house deposit, etc.
    But that's not the question that you're asking...

    I am looking to invest £250 a month for the next 7 years.

    I figured I would open an isa and invest in the HSBC FTSE 100 and 250 index in equal amounts.
    Is that not just the FTSE 350?
    Also am I being to risk averse for my 7 year investment period...
    Risk averse? I think it's quite a risky strategy for a medium time-scale.
    If you'd have invested from her birth then I would have said stocks and shares all the way, but with "just" 7 years I'd be tempted to put at least half of it in cash.
    You can generally get good returns on regular savers. You'll pay tax on them but even so they tend to work out better than cash ISAs.


    [Alternatively, a possible off-the-wall suggestion, how long have you got to go on your mortgage, if you have one? What interest rate are you paying on it? It might be worth putting this money into your mortgage as overpayments.]
  • thanks to everyone for taking time to reply.. lots to think about.

    love the comment about ftse 350..
    agree that ftse 100 and 250 isnt balancing risk
    great about if it should be used about fees!! I will keep money in my name and have a sensible chat with her when she is of a suitable age. I guess the situation is I just want to help her when she needs it so want as pot fo money for her. The vehicle is different matter.

    Mortgage - not an option for various reasons.

    I like the look of the F&C investment trust.. and how it lets you have different funds with different risk etc.. will look at figures/performance and charges when I get a bit more time.

    again - thanks to all, some really useful info.
  • my thinkings around ftse investment are that surely its got to recover over next 7 years, simple as that. thats why i was looking into low cost tax free vehicle for the hsbc tracker.. first managed fund i look at with f&c has made losses over last 5 years. So theyre the experts and they cant make money... this is what always leads me back to keeping it simple.

    with regards to the hsbc Global Investment Centre, is it possible to have an isa with them and use this Global Investment Centre to buy units in that fund? its as clear as mud on the site.
  • JimmyTheWigJimmyTheWig Forumite
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    love the comment about ftse 350..
    It wasn't a joke.
    I believe that...
    FTSE 100 is the top 100 companies.
    FTSE 250 is the next top 250 companies.
    FTSE 350 is the top 350 companies.
    It will be different to what you are suggesting as I'm guessing the 350 isn't split 50/50 between the 100 and 250, but would be very similar.
    I guess the situation is I just want to help her when she needs it so want as pot fo money for her.
    Sounds good. Doesn't need to be used for the purpose you are starting out with.
  • Voyager2002Voyager2002 Forumite
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    my thinkings around ftse investment are that surely its got to recover over next 7 years, simple as that. thats why i was looking into low cost tax free vehicle for the hsbc tracker..

    But it HAS recovered! Look at a graph, and you will see the absurd highs of 2007 (and the tech-stocks bubble almost a decade before), the lows of the crash around 2008, and the steady struggle up to the realistic values of today.

    I see a lot of scope for growth in the USA and would consider a Wall Street tracker... except that I think the S & P is already overvalued, and on that basis I sold my entire holding of a fund that tracked that index. I gained about 20 per cent over a year, so I'm pleased with performance but wondering where to put the money.
  • kidmugsykidmugsy Forumite
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    I read an article recently arguing that the terms on which ex-students repay debt are fairly tolerable, and that it might be wiser for parents instead to save with a view to helping them find the deposit for their first mortgage. If you find that persuasive it would extend the horizon for your saving.
    Free the dunston one next time too.
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