Saving for Granddaughters School Fees

Hal17

saajan_12 said: 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. 

That is spot on, I certainly do not want to think of her having to leave if the funding is not available. She has a lovely personality which I know will flourish in this particular school. I cannot see her particular needs being addressed in a situation where class sizes might be 30 plus. 

I have a plan in mind which should cover the full funding by the time she reaches the age of 12. Thanks everyone for the inputs, they have been very helpful. 

Hal17

I have just been reading my original post and all the very helpful replies that I received.

I was reminded of the comment that MX5huggy made about when my grand daughter reaches 16, we would still have an additional two years to fund, so could take a little more risk to cover this period.

As this is 10 years in the future, I have been thinking of giving my daughter £20K to open a Vanguard S&S ISA to invest in either the FTSE All-World High Dividend Yield UCITS ETF (VHYG) or the FTSE All-World UCITS ETF (VWRP). 

Any thoughts if one fund is better than the other? Or anything else I should look at? I only considered the ETF's because of the lower fees. Many thanks.

Alexland

Given current elevated stock market valuations I don't think those short to medium term investment timescales are long enough to be taking much if any equities risk. I wouldn't suggest investing for only 10 years in 100% equities as that can be about the time it takes stock markets to recover from a bad crash which could leave you with less than a safer option.

For your requirements I'd be looking at fixed term savings, money market funds, conventional bonds or maybe inflation linked bonds (although they are rather advanced). Or if you want some equities then maybe VLS40 or VLS60 for the 10 year requirement.

Or you could take a gamble and go with 100% equities and you might get lucky.

Hal17

Thank you Alexland, I appreciate your thoughts. Always good to get a different perspective. I am currently using fixed term savings to get the school fund established, so happy with that at the moment.

I have used VLS60 in the past for my own pension requirements and was happy with that. In hindsight there should be very little risk in the funds needed for the GD school fees, so might go VLS40 and not worry too much. Thanks again.