Will Making

No one likes to face up to their own mortality, but far too many of us take the head-in-the-sand approach when it comes to ensuring our family’s future security. EMMA TYRRELL explains.

Do not leave it to chance

Latest figures from the Independent Schools Information Service show parents putting a child of 11 through boarding school until age 18 can expect to pay about £118,000. A day school would cost about £68,000.

And some parts of the country are even more expensive. Hardest hit are families in the South East of England. In Greater London fees are rising at 6.8% a year compared with an average rise in prices of 3.1% a year. (Source: Independent Schools Information Service)

Who gets what?

People just do not realize how much private education can cost. And things do not just stop at age 18. There is the cost of further education to think about and university fees which students must pay towards themselves.

Muddling through on a term by term basis is becoming almost impossible. So how can parents hope to cope with such enormous costs? The first step is to work out how much you are likely to need. It is better to overestimate than underestimate because it is likely to cost more than you might expect.

But it is important not to base your planning on over optimistic growth assumptions for your chosen investment. And you need to decide how much risk you want to take with your money.

Talk to your IFA

The next thing to do is choose how you are going to save for the cost. You can choose a specialist school fees plan or put together a package of your own. Specialist plans can offer a simple way of saving because they provide a one-stop solution, but you may pay higher charges as a result.

IFAs can help you plan your own package. They will run through the options. Suitable products for school fees planning are investment bonds, endowments, unit trusts or investment funds of Open-ended Investment Companies and Individual Savings Accounts.

Always review your will periodically

An investment bond is a single premium plan bought from an insurer. For school fees planning, you can invest long enough to avoid penalties for withdrawing money and then you can take money as and when needed. Endowments can be bought as bundles, timed to mature as school fees are due. Endowments offer reasonable growth but returns are usually less than what you can get from a stocks and shares investment, like a unit trust or investment funds of Open-ended Investment Companies. Annual growth for endowments is about 13.1 per cent compared with 16.7 per cent for UK equity income funds. (Source: Money Management July 1999, 25 year figures to 1 June 1999)

“Most of us have something to leave, whether a piece of jewellery that has been handed down for generations or something of purely sentimental value.”

Click here if you would like a Financial Advisor to contact you