In an ideal world, who wouldn't want their kids to go to uni? I’ve picked up a few letters after my name over the years and I'd love the children to follow in my footsteps. The trouble is that, when I went, it was free. My lot will face tuition fees of (currently) up to £9,250 a year even before the beer bill. That’s £27,750 just to read books for three years!
If you were very organised, you would’ve started saving for this at birth. A tinker with the Hargreaves Lansdown savings calculator shows that if you put away £98 a month for 18 years on an interest rate of 3%, you’d be able to cover it. Strangely, during the first months of coping with a screaming rug-rat, tertiary education didn’t cross my mind. So myself and Mr Minted are a little late to the uni fees planning stage. But we think we’ve hit on a solution – the Junior Isa (Jisa).
This is the mini version of the adult Isa. You can shovel in up to £4,080 this year per child and all gains and income from the cash are tax-free thereafter. On the back of an envelope, we’ve worked out that we need seven years of Jisa allowance times two to pay for tuition fees for Dear Daughter and Darling Son. That’s eight grand a year – ouch. Starting now, we might just make it before the first one finishes A-levels.
These figures are without any interest or investment growth factored in so we could get a little bit over target which would help with rent and so on. Putting the money in shares (through investment funds) is a good idea for Jisas because you have a long time horizon over which hopefully bumps in the stock market would be ironed out. It may not be appropriate for everyone but we think the best destination for Minted Jisa x 2 this year is Lindsell Train UK Equity, a posh-sounding fund investing in shares from British firms. Its manager has an excellent track record.
For those nervous of shares, there are some decent cash deals such as Coventry Building Society on 3.25% and a clutch at 3% from Tesco, Nationwide, TSB and Halifax.
The one fly in this saving ointment is that your child gets to manage the investment at 16 (ie whether it goes in cash or investments) and control the money at 18. He or she could blow it all on sex, drugs and rock and roll and there’s nothing you can do about it. Alternatively, they might not want to go to university. And then there’s the argument that it’s not worth paying uni fees upfront because if your child never earns over £21,000 a year as a graduate, they never have to pay back the money.
But I’d rather have the luxury of worrying about that once I’ve got the £30,000 in my hand, wouldn’t you? So see our guide to saving for kids here and remember the deadline for this year’s allowance is 5 April.