AN EDUCATION IN SAVING
Our two boys, aged 14 and 16, are terribly bright and we want to put them through a top university. But my earnings as a freelance are uneven.
How can I be sure of having enough to pay for their tuition and living expenses from September 2003 until our youngest graduates? My wife does not work.
For each, you will need £1,000 for tuition fees and another £4,000 or so a year, depending on their lifestyle - but not all by September 2003.
Start budgeting now to save £3,000-£4,000 by then. Make it a family endeavour.
Cut down without cutting out essentials. Make small changes to spending that will make big differences to savings - it's a lifelong habit. Encourage your boys to contribute to their 'university fund'. If they work during holidays, it will look good on their UCAS forms. The dirtiest, most boring work tends to pay best; nice job experiences pay nothing. Open a high-interest account and systematically switch each £1,000 saved into European growth funds. Sterling (still) buys a lot of euros, so go for Europe now.
Be persistent in spending less, and invest more. By the time your sons graduate, you will all be the richer for the change in habits.
THE FUTURE IN A GUCCI BAG
Can you think of what to give my stylish daughter for her 21st birthday? She loves designer clothes but my husband's suggestion that we take her to Bond Street and kit her out at the designer of her choice seems pretty flaky to me. Whatever we buy will cost a bomb and will just get shoved to the back of the wardrobe in a year or two. Also, it is sending out quite the wrong message when we expect her to earn her own living aftershe leaves college this summer.
Your husband sounds like a lovely daddy and I am sure your daughter would be thrilled by his suggestion. But if you want her to learn to earn, a four-figure outfit from Prada is hardly an appropriate piece of kit. It sounds as if she is the sort of girl who would kill for a Gucci bag. Why not buy her one, in a classic, instantly recognisable Gucci design, and tuck into it a few LVMH shares in her name? LVMH is the world's largest luxury goods group, which owns Louis Vuitton, Givenchy, Christian Dior, LaCroix and other world brands, and has been pursuing Gucci.
You could buy her the shares tax-free, in a mini or maxi ISA (depending on whether you want to invest up to £3,000 or up to £7,000). Then encourage your daughter to save when she starts work, and to invest within her ISA in the shares of other designer companies that she thinks have a business edge. In that way she would learn about stock market investment through her passion for clothes. By the time she is ready to set up her own home, she will have gained useful investment knowledge and hopefully an elegant profit will be in the bag.
DOWN ON THE FARM IN FRANCE
I have my own interior design business, and while working recently with clients in France have fallen in love with Provence. Does it make sense for me to buy a small farmhouse in the area as an investment? The euro has fallen against the pound, and I could buy a four-bedroom house and do it up for at least 30% less than I could with a comparable property in the UK. Can you advise?
Changes in foreign exchange are short-term, while investment in property is long-term. Property is costly to buy and can be hard to sell. You should not take an investment view on French property based on the current and possibly transitory devaluation of the euro against the pound.
Before deciding whether to buy a farmhouse, first calculate - if you plan to rent it out - the annual income which you could reasonably expect to earn from it and then work out whether that amount would cover the cost of the loan, plus the professional fees, the cost of maintenance, etc. Do your homework in France to get the proper facts and figures.
If, on the other hand, you are planning to use the farmhouse yourself, you cannot rationally call it 'an investment' - except perhaps in terms of quality of life.
You might buy it cheap, do it up, live in it for a few years and then sell it for a profit - but do not forget the financial charges, maintenance, interior decoration and other costs you will have to meet in the meantime.
Also the hassle involved in buying property in France can be considerable, and don't underestimate how off-putting the long journey could be. Personally, I wouldn't invest in a property more than an hour's travelling time away.
If you have a number of French clients, who could pay you for your services in euros, you may be well-placed to cash in on the lower euro interest rates - not so much on a property in France but on property here. Why not ask your bank or building society if you can open a euro account into which your French clients can pay your fees? Then, provided that your net earnings in euros are sufficient and sustainable in the long-term, you should be able to switch the mortgage on your UK property into euros at a rate of about 4% to 4.5% interest per year.
You could then redecorate your UK property in the Provencal style and use the savings of some 2% a year on your UK property loan to go on French holidays - and stay in five-star hotels.
Opinions expressed are the personal views of Stella Shamoon. Neither she nor Management Today accept legal responsibility, nor will any correspondence be entered into. Address your problems to Management Today at 174 Hammersmith Road, London W67JP, or e-mail: firstname.lastname@example.org Stella Shamoon writes on private investment for The Times.