The value of investments and any income from them can fall and you may get back less than you invested.

Case Study: Giving future generations a financial leg up

Case Study: Giving future generations a financial leg up

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This case study shows how your child could emerge from university debt-free and with a head start to their adult working life, if you start saving early.

Ananya and James would like their daughter Rhea, 3, to have the opportunity to go to university without running up huge student debts. They decide to start saving into a Junior ISA on her behalf.

The plan

  • The current maximum you can save each year into a Junior ISA is £4,368.
  • This divides into 12 monthly payments of £364.
  • If Ananya and James methodically invest £364 each month into a stocks and shares JISA, by the time of Rhea’s 18th birthday she could have a nest egg of £89,875, assuming an annual return of 4% net of charges. 
  • With a JISA, the money is locked away until the child’s 18th birthday, at which point it converts to an adult ISA and they can access the funds.

Fifteen years later

  • Rhea, now 18, has won a place on a three-year course at university to study engineering.
  • Three years of tuition fees and living costs now amount to just under £75,000.
  • Each year Rhea draws around £25,000 from her ISA fund to cover university tuition fees and maintenance costs, leaving the remainder invested.
  • At the end of her third year she graduates and unlike most of her student friends she is completely debt-free.
  • Thanks to her parents’ foresight, she can use the money remaining in her ISA for a house deposit, giving her a head start over many of her graduate friends.

 

 

[1] Source: Brewin Dolphin.

[1] Source: Brewin Dolphin.

Cost assumes 2% p.a. inflation of current university tuition fees (£9,250) and living costs (£9,240 p.a. Source: Savethestudent.org: Student living costs in the UK 2019.)


 

The value of investments can fall and you may get back less than you invested.

Past performance is not a guide to future performance.

No investment is suitable in all cases and if you have any doubts as to an investment's suitability then you should contact us.

Please note that this document was prepared as a general guide only and does not constitute tax or legal advice. While we believe it to be correct at the time of writing, Brewin Dolphin is not a tax adviser and tax law is subject to frequent change. Tax treatment depends on your individual circumstances; therefore you should not rely on this information without seeking professional advice from a qualified tax adviser.

Brewin Dolphin Limited is authorised and regulated by the Financial Conduct Authority.

 

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