New parents could cover their child’s university tuition fees by investing just £3 per day
- £90 a month invested over 18 years could grow to £45,510 - enough to cover inflation-adjusted tuition costs
- Analysis is based on average annual MSCI Global Index Tracker return of 7.35% and the power of compounding
London, Thursday 14 August, - New parents could cover the full cost of their child’s future university tuition by investing just £3.00 a day, according to new analysis from investment platform IG.
With average tuition fees currently at £27,750.00, the inflation-adjusted cost1 could rise to around £45,410.00 over the next 18 years. But IG’s modelling shows that investing £90.00 a month from the birth of a child - equivalent to £3.00 a day - could be enough to meet that figure by the time they are ready to go to university, assuming consistent market performance.
The projection is based on the average annual return of 7.35% delivered by a basic MSCI Global Index Tracker2 over the past 18 years. With the benefit of compounding, this level of contribution could grow to around £45,510.00 - enough to cover projected tuition fees in full.
Current tuition fees
|
£27,750.00
|
Tuition fees in 18 years (2.8% annual inflation)
|
£45,410.00
|
Daily investment needed
|
£3.00
|
Monthly investment needed
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£90.00
|
Annual investment needed
|
£1,080.00
|
Estimated future value of investment after 18 years
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£45,410.00
|
Chris Beauchamp, Chief Market Analyst at IG: “Compounding is one of the most powerful tools at the disposal of investors with time on their side. While it’s impossible to predict investment returns and future economic conditions, if the market repeatedly provides us with one lesson, it’s that investors who start early and remain consistent despite market conditions reap considerable rewards in the future.
“With tuition fees running into the tens of thousands, many young people are starting their adult lives burdened with debt - a tough reality especially in today’s uncertain jobs market. But parents who start early can help change that. Our analysis shows that by investing just £3 a day - less than the cost of a takeaway coffee - from the day their child is born, they could cover the full cost of tuition fees and give their child a meaningful head start.”
1 Average CPI rate taken from The Office for National Statistics (ONS)
2 Figure provided by IG - based on the average returns of a MSCI global index tracker over the last 18-years
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