Secondary School Funds - What would you do?

I’m exploring my options in planning for my child’s secondary education. I’m reaching out for advice on how other’s put aside money for similar funds such as College funds etc. In essence, private secondary education is no doubt expensive, so I want to plan ahead.

I don’t currently live in Australia and won’t be back for sometime, so international options may also be on the cards here.

A few options I have thought of:

1. Standard child savings account, which often have some bonus interest paid above the standard rate
2. A ‘high interest’ term deposit account of some type
3. ETFs but concerned about the tax implications.

Have I missed anything or if you have a moment, care to help me with my options.

Thanks.

 

I have gone through a similar exercise to put aside money for my 2 kids high school education. I have allocated $200k in a mix of domestic and international Index tracking ETFs.

Obviously there is a risk investing in equities over cash, but my youngest will finish in 2031 so Ive taken a view that over that time frame I think shares are more likely to give better returns than $ left in the bank.

Also what are your concerns regarding tax? Tax could be worse on annual interest payments on a term deposit Vs compounding capital gains?

 

Consider insurance bonds as well - tax free after 10 years.

 

Many thanks for sharing. I’m getting in very early so he’ll be finishing secondary in 2038. Still currently in nappies I’d be drawing from the funds on a year by year basis from circa 2031 when yearly school payment is required.

My concerns regarding tax were exactly as you stipulated. And you’re right on the long-term potential gains from ETFs outweighing the tax we’d need to pay. I might run the maths on a few scenarios.

 

Glad you mentioned this as it’s something that has come in our conversations but didn’t occur to me in my post. The long term aspect is appealing as I have no intention of touching the money for at least a decade or more.

Thanks for sharing.

 

Depends where they are educated. A state school is very different to an elite private school. I know wealthly people who find state school acceptable. And one whose child chose a very expensive from of dramatic arts which saw her choose a very very expensive private school with gymanastic paths. Another whose child pursued foorball (soccer) and is not playing in the UK. The went to a costly sports high school

 

We went through the same thought process years ago. Ended up starting and growing a share portfolio in my wife's name as she didn't work at all whilst the kids were young.

That way, we could fully claim back the dividend imputation credits and reinvest.

The goal was to grow it to the point that when our eldest started private high school, the dividends could cover the majority of fees. It has pretty well achieved that, and at the end of schooling, we will have a nice little portfolio to supplement our retirement.

 

Nice, and how about kid #2,3?

 

Nah! They were crap

 

You shouldn't have done the home schooling thing in that case.

 

It was designed to cover the 2nd child as well, but as they grew older, we recognized they weren't as much of an academic and was happy with a State High school.

Child #2 just finishing first year of HS now.