Pounds Parking

[mummynew]

If I want to park aside 180K pounds for a child's UK degree 3 years later, what is the best way to plan for it with the current SGD equivalent sum that I have in hand? I can take some low-mid investment risk as I have other sums to cushion if the investment doesnt do well in 3 years time.

Anyone kind soul can advise?

 

[BBCWatcher]

If I want to park aside 180K pounds for a child's UK degree 3 years later, what is the best way to plan for it with the current SGD equivalent sum that I have in hand? I can take some low-mid investment risk as I have other sums to cushion if the investment doesnt do well in 3 years time.

Anyone kind soul can advise?

Interesting question! I'm going to assume this is an expected expense of roughly £60K per year for 3 years starting 3 years from now, but please amend that if I'm incorrect.

I have to ask a question up front, though: do you have roughly S$300K already, lounging around in a bank account (for example)? Or is the idea that you'd start saving from some Singapore dollar income stream now so you can start supporting about 3 years of British pound payments starting about 3 years from now? Because the "best" answer is probably a little different depending on where you're starting from.

Also, how confident are you this expense will actually occur? Or do you need to worry a little about a "Plan B" exit?

 

[mummynew]

Thanks BBC for reply.

Your assumption is correct.

This sum of SGD equivalent is a sum realised from a 5-year endowment policy (realised at around 4% pa). Basically don't quite know what to do with it and looking at pound exchange rate now makes me wonder whether I should park the sum in pounds instead.

I foresee I will spend this pound amount 3 years from now.

I am not worried about a Plan B exit in the event that anything crops up within these 3 years and the child misses the opportunity by his own doings or whatever.

Appreciate your suggestions!

*wonder if my 'attitude' towards this sum will 'add value' to planning. It's a sum that I am prepared to spend all as a gift with no expectations of returns, meaning it has no 'real value' to me if I were to keep it for self.

 

[BBCWatcher]

OK, so I'm going to assume £60K per year of spending for 3 years starting 3 years from now. The basic idea is to create a "conveyor belt" from Singapore dollars to British pounds. So I think I'd do something like this....

1. Start converting S$60K per year (=S$5K per month, or S$15K per quarter if you prefer) now into British pounds. Keep spare Singapore dollars in decent, laddered vehicles such as SSBs, T-bills, fixed deposits, and short tenor Singapore Government Securities.

At this pace all S$300K will be converted within 5 years, just in time for the final £60K. Since you're Singapore dollar cost averaging into British pounds that'll help, and your Singapore dollars are working on the Singapore side in the meantime.

2. On the receiving end it looks like it's awkward to buy U.K. gilts (government bonds/bills) directly, but that's one possible option. Bearing in mind there's some interest rate/principal risk (but probably not huge), how about one or a couple British pound bond funds? Maybe (London stock exchange symbol) IGLS and/or INXG?

Interactive Brokers could do all this except perhaps for the Singapore dollar parking (which you can already do).

 

[mummynew]

Interactive Brokers could do all this except perhaps for the Singapore dollar parking (which you can already do).

Thanks for your kind advice.

I will go and study more about the pound bond funds.

*I am getting old and kind of thinking of probability of 'early departure' from life. So my preference actually is more like to do it one shot SGD - Pound conversion and park the amount there and then to list it 'neatly' in my Will for the beneficiary.

Thanks again.

 

[BBCWatcher]

You could, or some hybrid. If monthly or quarterly is too often try semi-annually for example.