All parents want to ensure their child has the best start in life – that they are healthy, happy, and have the best opportunities. Going to university and obtaining a good degree is almost essential for most career paths in today’s professional environment, and a good university education is getting increasingly more expensive. As such, it’s essential that parents plan ahead, saving and investing money for the future. This guide offers useful tips for parents who want to make more out of their child’s university fund.
Investing in gold bullion can help you safeguard your money, and it has several other advantages that make it ideal for parents saving up a university fund. First off, it is relatively stable compared with almost any other commodity, so although the prices rise and fall, these fluctuations aren’t as extreme as other commodities and other precious metals, such as platinum and silver.
Another advantage of investing in gold is that it cuts out the third-party risk that usually comes with other kinds of investments. With gold bullion, you own it directly, you insure it, and you store it either in a safe or an assay office. There is no bank or organisation that can go under and bring your money down with it. Your gold bullion is a physical asset, not numbers on a computer, and it will never disappear.
Another good thing about investing in gold is that its value is easy to track. If you are thinking about investing in gold for your child’s university fund, you should make note of its value each day, over several months. This will give you a strong sense of how gold fluctuates over time, allowing you to buy it when its price is slightly lower than usual. For much of the world’s markets, gold is fixed according to its value in the London markets at 10am and 3.30pm each day. This is called the London Fix. You can find gold’s real-time value on London Gold Bullion; the homepage has a widget that tells you the value of gold and is updated regularly.
Perhaps the greatest advantage to investing in gold over other assets or commodities is that there is no VAT or stamp duty on gold bullion. This means that all of your money goes into the gold investment itself. The safe storage and insurance is not expensive and is easy to maintain.
High-yield Savings Account
Whilst ordinary savings accounts only offer around 0.01% interest per year, high-yield savings accounts offer from 1.5 to 5% in most cases. High-yield savings accounts are ideal for parents saving up a university fund for their children because they generate significantly more money over time and they are still reasonably safe.
If you’ve just had a baby, it’s a good idea to pass out the account number and sort code of your child’s savings account to your extended family and encourage everyone to contribute to it instead of showering you baby with too many clothes that the baby will only grow out of in three months’ time. Adding to your high-yield savings account over time is often a necessary requirement, so make sure you’re meeting the regular contribution quotas.
One good feature of most competitive high-yield savings accounts is that there is usually no minimum deposit amount. This means that you can put in any extra money you have each month, allowing this amount to change depending on what you have spare. Gradually, over time (and with 5% interest!) you’ll be able to generate a sizable university fund for your child.
As you’ll potentially be investing huge sums of money in this account over time, it’s worth shopping around for a bank or company that you trust. Do a little research on the different companies until you find the right one for you. Best Savings Rate collates all of the best savings rates of different accounts each day; looking on this every now and then will help you find the right savings account for you. Look out for an account that allows day-to-day control, as some accounts lock you out over long periods of time. One thing to make sure your account has is ATM access. Also ensure it doesn’t have a minimum deposit amount. It’s a good idea to make a comprehensive list of the different high-yield savings accounts you’re interested in, along with each account’s pros and cons. Spending a little time working it all out will pay off down the line.
Another brilliant way to generate a steady source of income for your child’s university fund is to invest in property and rent it. Obviously, buying property is a huge investment, but the potential return on investment is huge. Another benefit is that renting a property pretty much pays for itself after you have made the initial deposit. This is because the rent made on the property can be used to pay the mortgage and any other upkeep costs.
This strategy works particularly well if your child is quite young, as this will give you 16–18 years (give or take) to pay off the mortgage. After this, all rent made is profit. You can change the deed over to your child’s name when they go to university and all rent payments will go to them. This is also a great way to teach your child some responsibility.
Keep an eye on the property market, looking to buy when prices are low. Other than saving money on your deposit, this also increases the ROI should you ever choose to sell your property. It may, for example, prove very profitable to sell your property when property prices are really high. This will give you a huge lump sum that you can then use to invest in something else – perhaps gold bullion or a high-yield savings account…
When looking for a property, look for somewhere that is likely to attract responsible tenants with sufficient means to reliably pay rent. Houses in the suburbs with 3–4 bedrooms tend to attract families, and families are usually more responsible than single tenants or students. High-spec apartments in the city also tend to attract people with high-paying jobs, meaning they will always be able to make the monthly payments.
That’s all of the advice for this guide. I hope it’s given you a few ideas about how start saving up for your child’s education. If you start early enough and you’re organised, you can save more than enough to ensure your child has the best possible start in life.