Saving for Granddaughters School Fees

Hal17

I have decided that I would like to help fund the private school fees for my granddaughter when she reaches her 11th birthday.

My goal is to reach £120K over the next 6 years. I understand due to the timescales that this should be in savings rather than investments, but saving interest rates are falling. My initial thought is to give my daughter £20K per year (from surplus income) for the next six years to put into an ISA in her name.

My daughter has a pension with Vanguard and could open a S&S ISA on that platform. If we went this route we would need to be cautious with our investment choice. I was thinking of their Lifestrategy 60 as an option to start? Would appreciate any thoughts?

masonic

Lifestrategy 60 is perhaps not cautious enough for that timescale, but she could add future contributions to, say LS 20, to gradually reduce the overall risk over the subsequent years. Possibly a switch to a money market fund for the final year or two would be wise.

Labtebricolist

We use HL active savings to make a fixed term savings ladder for school fees, on the basis that it isn’t an area where we want to take any market risk. The idea is that we always have a tranche maturing at the start of the school year.

Depending on the cost of the school you have in mind 20k per year might not earn quite enough to cover future fees even with six years lead-in, in which case a degree of risk-taking might be necessary but, as the previous poster noted, 60% equities might be a bit strong given the potential for heightened volatility over the next few years.  You might also consider (dare I say it) timing the market a bit by taking a bit less risk now and keeping some dry powder for later…

Hal17

Thank you both for the replies and very much appreciated.

I agree with you both and especially Labtebricolist. I will certainly have to consider the need for additional funding as the school fees will only increase over my saving period. So will consider saving more in less risk areas in order to ring fence the sum required. Thanks again.

nottsphil

Hal17 said:

My initial thought is to give my daughter £20K per year (from surplus income) for the next six years to put into an ISA in her name

Minimum age for a cash ISA is 16 (rising to 18 on 6 April).

Albermarle

nottsphil said:

Hal17 said:

My initial thought is to give my daughter £20K per year (from surplus income) for the next six years to put into an ISA in her name

Minimum age for a cash ISA is 16 (rising to 18 on 6 April).

The OP is planning saving for his granddaughter, so we can presume his daughter is an adult.

nottsphil

Albermarle said:

Iottsphil said:

Hal17 said:

My initial thought is to give my daughter £20K per year (from surplus income) for the next six years to put into an ISA in her name

Minimum age for a cash ISA is 16 (rising to 18 on 6 April).

The OP is planning saving for his granddaughter, so we can presume his daughter is an adult.

I read 'her' as referring to his granddaughter, but your interpretation is the more likely.

Hal17

Thank you for the replies. Yes I was planning on giving the money to my daughter, so she can save into an ISA and then fund school fees in the future. 

MX5huggy

If you consider that you’re saving for the last year of school fees when the GD will be 17 plus first you might have a different view on time horizon and may be willing to take more risk, such as lifestyle 60.
Just check you know once you give the money to your daughter it’s hers do with what she pleases.
Then a little warning, private education is not a panacea, my significant other went for secondary education she still considers she was removed from her friends put in a strange environment single sex with a group that she had little in common with and just about survived there was a nasty division between day pupils and boarders (she was a day) and she has no school friends from before she swapped from all girls to mixed for Alevels where she had a better time and has 2 life long male friends. 

Hal17

Thanks MX5huggy, that is a very good input regarding private education.

Fortunately, I have another GD who is 14 and is attending the same private school that I would like my younger GD to go too. She has excelled and just loves everything about the school. So I have first hand experience of what to expect. My son and I have worked hard to cover all her fees until she finishes A levels, so that's one problem out of the way. Now to concentrate on trying to fund the younger GD journey through secondary education in 6 years time.

saajan_12

MX5huggy said:

If you consider that you’re saving for the last year of school fees when the GD will be 17 plus first you might have a different view on time horizon and may be willing to take more risk, such as lifestyle 60.
Just check you know once you give the money to your daughter it’s hers do with what she pleases.
Then a little warning, private education is not a panacea, my significant other went for secondary education she still considers she was removed from her friends put in a strange environment single sex with a group that she had little in common with and just about survived there was a nasty division between day pupils and boarders (she was a day) and she has no school friends from before she swapped from all girls to mixed for Alevels where she had a better time and has 2 life long male friends. 

My read was the grand daughter is ~age 5 currently, and OP is looking to save up over the next 6 years until grand daughter reaches age 11, at which point she would start private school? 

OP please confirm. If that's the case, then consider you have a little longer for the latter years' school fees. However  I assume you'd want to make sure you stay some years ahead and not cut it too fine, as it would be quite chaotic to change schools again if the money runs out.