'I want to invest to put my children through college'
Ivan Kennedy (49) from Limerick set up a couple of investment funds a few years ago in order to pay for third-level fees and costs for his two young children, Michelle and Richard.
"Whether they take it or not, or whether they have the interest, I took the view that, if it was the last thing I did before I retired or died or whatever, I want to be able to put my children through college."
With the help of his colleagues and fellow parents at Limerick accountancy firm OBI, Ivan estimated that the current costs of funding a child for four years of third-level are about €15,000 a year if living away from home (or €8-9,000 if living at home), so factoring in inflation, he is targeting a fund that would pay €20,000 to €25,000 per annum for each child in over 10 years' time.
Both investment funds are from Standard Life; one is a GARS (Global Absolute Return Strategies) fund while the other invests in UK commercial property.
He could have a chosen a fund that provides a capital guarantee, which promises to pay all or most of your capital back at the end of the term regardless of performance, but the problem with that, says Ivan, is that the burden of providing this guarantee stops them from taking more risks that might provide a better return in the long term.
The GARS fund has a capital preservation 'remit', he says, without the weight of having to provide an actual guarantee. "It's the old risk/return conundrum," he said, but so far his choice appears to have paid off, with GARS return an average of over 6pc per annum after charges since 2010.
The UK commercial property fund has also done well, growing by 14pc last year, and by over 4.5pc this year to date.