If you are thinking ahead to the costs of university fees, thoughts regarding the amount you need to save have recently been released. But beware and be realistic.
A recent investigation has revealed that if you are thinking of investing a lump sum, an amount of £19,000 should cover a three-year degree at a smaller university with fees and living costs totalling £35,000. At a more prestigious university the fees and living costs were said to total almost £55,000 for a three-year course the amount needing to be invested should be around £30,000.
In terms of the length of investment, the lump sum would need to be invested around the time your child reaches eleven.
If your savings towards university are likely to be on a regular basis, saving £238 per month from age eleven should produce the required amount.
We understand that the figures for this research were based on investment returns of 7 per cent. Whilst this is a well-used assumed rate of growth, we have reservations that in the current investment climate it is unrealistic.
When saving for the future, for whatever reason, you must make sure that you are realistic about the returns you will receive. As a rule of thumb, the less risk you take with your savings and investments, the lower the likely returns.
As a guide, have a look at interest rates paid on bank deposit and notice accounts. Currently they are around 4%. Also look at the stock market performance if you are thinking of investing this way. Be aware that stock market investments vary on a daily basis and that growth is not guaranteed as we have all seen recently.
Use the 'Ask an Adviser' service to get help and ideas on saving for children, education costs and the future.
Would you like a copy of a free fact sheet "Saving For Children"? Contact us .