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Killiks & Co research indicate private school (at curent prices) reflect poor invetment.

(106 Posts)
topsy777 Wed 15-Jul-15 11:02:11

"The research, published by investment advisers Killik & Co, says the £236,000 paid by parents of a day pupil would, if invested, return nearly £800,000 over the child’s lifetime – enough to pay for university, put down a substantial deposit on a house and leave £500,000 for retirement."

www.theguardian.com/education/2015/jul/15/private-school-education-could-be-poor-investment-research-shows

All views welcome :-)

MN164 Wed 15-Jul-15 11:51:01

There is the private vs state debate to be had here, but I dwell on a different point.

Would I prefer to

A) increase the chances of independence and success for my children (highly debatable point but must be a major decision factor for private education)

Or

B) increase their dependence on inheritance of wealth I've earned.

If you read to the end of the report they acknowledge that they will probably earn more following a private education anyway.

MN164 Wed 15-Jul-15 11:55:04

Also Killik would love to get their hands on all that money so they have a hugely vested interest.

topsy777 Wed 15-Jul-15 12:06:12

Thanks mn164. I have no doubt they they have vested interest though worth a thought about what they said.

Kenlee Wed 15-Jul-15 12:11:43

Ah but the question has to be asked would your child be happy. There is no price that can be placed on happiness.

DarklingJane Wed 15-Jul-15 12:13:23

It depends what your options are.

If your option is an good state secondary then I would agree, the VFM from fees is questionable. If the state option is poor then it could be the best money you have ever spent (if you have it and if the private school is good ). I don't think it's a question you can answer in a vacuum. If I had options which resulted in MN164's A) or B) I'd go for A).

Ahwoo Wed 15-Jul-15 13:14:12

Over the child's lifetime? So are they assuming a period of over 80-100 years on this?

A casual glance at the FTSE100 over the past 30yrs saw a 5-fold increase and then some. The implication here is either Kilik can't outperform the index or their fees are too high.
wink

Brawnails Wed 15-Jul-15 13:20:16

Hi
The Killik 2015 Private Education Index aims to give people the facts to make an informed decision on private education and put into perspective the costs involved and that paying for a private education needs careful planning - the sooner the better.

Full research and a school fees calculator available at www.killik.com/education

Brawnails Wed 15-Jul-15 13:41:45

Barclays Gilt Yield Study shows that over any 5-year period over the last hundred years stocks have delivered just over 5% each year. Killik's research has used a more conservative 4.1% annual rate of return to reach the £800k. If the 5% was used it would be significantly higher.

morethanpotatoprints Wed 15-Jul-15 13:48:59

Would people actually save the money and invest it otherwise or just spend it on more luxury items?

Also, the investment you make in their education could really improve their life beyond recognition, depending on the alternatives. This to most people would be worth twice as much as the figures given above.

TheWordFactory Wed 15-Jul-15 13:58:03

It's rarely either or.

The wealthy, who can afford private school fees, can also afford to pay for university and help with deposits.

Yes, there might be some who have to make the choice. But I'm sure they weigh it all up.

Most young people don't get any of it. No private school. No payment of university fees. No deposit.

mummytime Wed 15-Jul-15 13:59:15

Umm if parents can afford private education, then I'd kind of expect their offspring to be high earners, and if they went to a State school, they are slightly more likely to get a higher classification of degree. Therefore, sending your DC to State school you save the fees, and they get a better degree (and you can afford focussed tutoring if necessary).

Of course most people don't have those choices.

MN164 Wed 15-Jul-15 14:01:44

TWF

You're right. This is a discussion for a very few that could afford fees in the first place. If they have a decent state school (inc. faith or grammar) on the doorstep then they may well decide to live off the state and save themselves £250k per child. Killik will be keen to help the rich get richer at the taxpayers expense.

MN164 Wed 15-Jul-15 14:05:53

Just looked at the link to Killik Education posted.

Is there any product there that isn't all about "tax efficient solutions"?

So the message is avoid paying taxes but use the state system for education if you can get away with it?

Nice ... real nice.

peltata Wed 15-Jul-15 14:10:26

Like any investment there is risk. So the local secondary could be so-so when your child is born but outstanding when they get to go there, and the reverse can happen too.

I think private schooling is lower risk in this respect, especially the more famous, long established ones.

So the expensive choice is yours smile it really depends on the school and your child and you don't find out till the last few years of education.

TheWordFactory Wed 15-Jul-15 14:39:45

If you can cheerfully invest 18k a year, in the full knowledge that it's a risk, and you might not see the return you want, at the time you want it (recently my Chinese portfolio tanked. It's come back up now, but if I'd needed the money then, for university, we'd have been fucked) then you can probably afford school fees too.

ScottishProf Wed 15-Jul-15 18:03:45

mummytime "if they went to a State school, they are slightly more likely to get a higher classification of degree. Therefore, sending your DC to State school you save the fees, and they get a better degree"

No - this is a common garbling, but it's nonsense. There's not a shred of evidence that if you choose to send your child to a state rather than an independent school they are more likely to get a higher classification of degree. What there is is evidence that if you take a state and an independently educated child with the same A level results then the former is slightly more likely to get a higher classification. (Only very slightly, mind, at the top end: iirr, you're already overcompensating if you drop an offer of BBB or above by 1 grade in 1 A level for the state school child.)

We can't randomise children at birth, but the plausible result of the thought experiment where you separate your identical twins and send them one state and one independent is that the independent school child gets a better chance of good A level grades, and a slightly better chance of a good degree, than the state school child. It's the drop from "better" to "slightly better" that gives the results observed when you compare state and independent school children with the same A level grades. The independent school gives better results, but less than 100% of that advantage carries through to degree level. Surprised? You shouldn't be.

WhattodowithMum Wed 15-Jul-15 18:16:20

Hmmm, I live in London. There isn't much difference in the price of most day schools. But there is definitely a difference in prestige and results. Perhaps some schools give a better return than others.

SqueezyCheeseWeasel Wed 15-Jul-15 18:17:24

Is it private v state spamtroll day on MN or something hmm

AmazonsForEver Wed 15-Jul-15 18:22:52

What MN164 said in her first post!
I'm not paying fees as a financial investment. I'm educating my children to give them the best possible opportunities to be fulfilled, independent, rounded-out individuals.

roguedad Wed 15-Jul-15 20:39:33

I thought the report was completely tacky. I'm not measuring education as a financial investment either and Killik is clearly a company that deals with the kind of selfish twat who thinks of everything in monetary return with tax avoidance at the top of the agenda. I was state educated and expected to have my kids go the same way, but was driven to go private in sheer frustration at the poor quality of our local "Good" primary. It costs me rather more than half my after-tax income for 2. Can't pretend I am happy with the costs or the 6-7% hike I got for next year, but I am mostly very happy with the quality. If I ever start thinking of education in terms of monetary returns somebody take me out and shoot me.

rabbitstew Wed 15-Jul-15 20:47:09

Whatever floats your boat. Life isn't all about money and investments. Did you know that if you donated the £236,000 to a charity looking for a way to prevent malaria, your money might help them find one? And you don't even have to expect anything in return.

granolamuncher Thu 16-Jul-15 00:09:01

The wealthy, who can afford private school fees, can also afford to pay for university and help with deposits.

TWF, it ain't necessarily so. Parents may have budgeted for their DC's school fees before £9k pa tuition fees came along and before private schools decided to increase their fees by 3 or 4 times inflation year on year, even during the latest recession. They stay loyal to their DC's schools but their budget's exhausted before the DC get to university.

Hence the comfort to be derived from the recently reported musings of the High Mistress of SPGS who doesn't think young people "need" university any more. grin www.independent.co.uk/voices/comment/the-degrees-are-useless-theory-is-fine-if-youre-posh-assertive-and-lucky--the-only-people-it-fails-are-poorer-children-10386284.html

Kenlee Thu 16-Jul-15 03:08:20

The point is if I can pay for my child to be happy in a private school settled and doing astonishingly well. Then why not. The money really isn't yours unless you spend it on sonething you want. I'm quite happy to pay for my DD's fees. Not so happy that they rise the fees so. Anyhow life is about choice. We are happy that she is happy.

TheWordFactory Thu 16-Jul-15 07:19:24

granola so maybe those types of parents are who this investment suggestion is aimed at.

They can't really afford the school fees and spend time bitching about how terribly unfair that is and how school is no longer VFM.
Killick et al spot ready mugs customers.

Back in the real world the majority cannot afford school fees set at low levels, or investments.

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