Leader: Salutary stat puts saving into perspective

FS Adam Lewis 160 byline

As a father of a daughter just 18 months old, the following statistic is one that makes me a tad nervous. According to research, the average debt for students who started at university in 2012 is expected to be a mere £53,000 on graduation. I use the word “mere” loosely, of course.

Admittedly, for me this is a problem some 17 years down the line but it serves as a wake-up call for getting Elsie’s saving scheme started now.

It seems the parents interviewed as part of research by the AIC expected the debt after a university education to be in the region of £18,000, whereas students themselves expected it to be higher, at £24,500. It seems we all greatly underestimated the extent to which tuition fees play a part.

So what to do? According to the AIC, if I put £50 a month into an “average” investment trust, less fees, over 18 years I could expect to get back nearly £25,000 (going by past performance, 18 years to 30 June 2013, and, yes, past performance is no guarantee etc …).

Of course, I could hope not to be in an “average” trust and use all my years of experience as a financial journalist to pick the “exceptional” performer. Or, as luck would likely have it, I will end up with the “poor” one.

The key is that a commitment for 18 years is a solid long-term investment and the ideal vehicle for me to put the theory I have accrued into practice. I might even start a regular blog called Elsie’s Isa, just to let you know how I am (or rather, she is) getting on.

So what else can I sacrifice to reach the magical £50k level? Well, actually it is unlikely to be £53k in 18 years’ time. Taking inflation into account, I could see the cost rising to, say, £100,000. So I should raise my premium every year.

Alternatively, I could try to persuade Elsie not to go to university, put a tennis racket in her hand and hope Andy Murray’s Wimbledon success will inspire her to emulate his achievement. Yet, knowing how much tennis club memberships can cost, maybe that £53,000 university bill does not look so bad after all.