Ask the Experts – Supporting your children through higher education

We’ve had a question from Felicia; Alvin if
you’ve only got three years before you know a child is going to be leaving home and going
in to education is it too late to put together major saving for them? No it’s not too late. I think a critical part
of it is to determine the amount that you want to save over those three years. You have
a set target you know what you’re going towards, you’ll know the sacrifices you need to make
to reach that goal. That’s the key component. The one thing that I’d remember is that you
don’t need all the money for day one. So you don’t actually have three years, you have
six years. Or rather you have three years but then the payback, the money that you will
want to take out, you will be taking over a period of three years so sit down and budget
for that eventuality as well and think about that. So it’s really important to make sure
you can get access to your money as and when, some savings account for example will allow
you to make a certain number of withdrawals a year and that might work out very nicely
in terms of term time or when your child needs the money so I’d just factor that in to your
planning. Advisors often recommend that you only consider
stock marketing investing if you’ve got a sort of five-year time horizon. But it’s a
case of looking for the highest rate of return, it’s looking at where you can get the best
return on your money and keeping an eye on what rates are available and reviewing it
at least once a year and being prepared to move and just getting in to that habit of
working out how much you can afford to put away each month and just keep putting it there
to maximise and save as much as you can over the next three years. So I think there are a couple of critical
things that I would say: one is that the usual rules apply, in terms of making sure that
whatever it is that you put away it is affordable to your own budget; and the second thing is,
you can clearly tie up your money in saving products for different periods of time and
with different penalties if you need to come out early so it’s really critical to think
about what you may need to do in an emergency situation and whether you can afford to wait
for those funds to become available if you need to.

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