Mr M-C, aged 64, is resident and domiciled in Bangladesh. He is a successful businessman in the textiles industry. He has built wealth, and expects his two sons do well in life. However, he is nervous about political risk in his home country and wants to ensure that his grandchildren have the best start in life, regardless of any potential failure in the family business. He is particularly concerned at what would happen if his home country were to become politically instable and how that would affect business.
His thee grandchildren are aged 9, 8 and 7. He wanted to know if he could set aside a sum of money to ensure that sufficient funds were available to educate them at university, for up to four years each, between the ages 18 and 22.
We looked at the sort of universities that Mr M-C would like his grandchildren to attend, in the UK and US, and their current charges. Aware that education
inflation runs significantly ahead of general inflation, we carried out an analysis to work out what sums would need to be available between 2025 and 2030 to ensure his objectives were met, assuming an education inflation rate of 3.9% and a likely investment return (based on his risk profile) of 6.5%.
By using cash flow forecasting, we were able to show Mr M-C that he needed to build a fund of £720,000 by age 76. We could show that this would cover education costs, on our chosen parameters, and also enable him to give £30,000 (in today’s money) to each grand-child on graduation. We showed that by setting aside just under £500,000 now, these objectives are likely to be achieved.
We selected an investment company to manage this investment, identifying it as the one most likely to reflect his personal objectives. We also appointed a Trust Company who established the Education Trust to ensure that, whatever happens to other finances, these funds are always earmarked to fulfill the requirements that were intended.
In the years ahead, we will constantly review both investment and trust companies to ensure they meet and exceed Mr M-C’s requirements.