9 ways to invest for private school fees without derailing your finances

Private school fees can top £400,000 by the time your child finishes their A-levels. Here are 9 practical steps to start investing towards the cost - from using your ISA allowance early to Junior ISAs and pound-cost averaging - without derailing your own finances along the way.

How much do private school fees actually cost?

Private school fees have been all over the headlines, and not just since the 20% VAT bill landed in January 2025.

The average day school bill went up by 23% between January 2024 and January 2025, and according to The Good Schools Guide, if your child is starting reception at a private school now, you're looking at a total bill of more than £400,000 by the time they finish their A-levels. This increases dramatically to £670,000 if you send your child to a top London school.

My own children are coming out the other side of their school days now, but the spending isn't quite over. There's still university tuition and living costs to think about, which is no small worry given how punishing the terms are for graduates these days.

This is one of the biggest financial decisions many of us will make, which means it needs a plan, not a wing and a prayer. Here's mine, in nine simple steps.

1. Use your tax-free ISA allowance first

Every year you can put up to £20,000 into a Stocks & Shares ISA, which shields any returns from tax. For most long-term savings, this is the obvious place to start.

2. Start investing as early as you can

The average managed Stocks & Shares ISA returns somewhere around 5% to 7% a year.

If you paid in £20,000 a year for three years and made 6% annually, you could end up with roughly £7,500 of tax-free returns by the time your child starts reception. Not to be sniffed at, though you'd probably still need to dip into the capital to cover that first year of fees.

Invest like this for 10 years, starting before you even have children, and the return could be almost £80,000. That's the equivalent of four "free" years of school fees.

Remember, these are illustrations, not promises. Returns are never guaranteed and the earlier figures assume a steady 6% every year, which real life rarely delivers.

3. Split your savings into short, medium and long-term pots

School fees aren't a one-off cost. They're an annual pain point for years on end.

One way to handle that is to split your savings into a few pots, for short, medium and long-term timeframes. Between them, they can cover a whole education: short-term money for the early years, medium-term for the first years of secondary school, and longer-term money that has time to grow for the A-level years and maybe even university.

You might not plan to go private for the whole journey, and that should shape your choices too. If your child is a baby and you're thinking about private school from secondary age, you've got a 10-year-plus horizon, so a higher-risk approach gives you the best chance of growing your money.

If your timeframe is shorter, say you're planning to send an 11-year-old private for their GCSE years, a Cash ISA may make more sense. Investing isn't really suited to short timeframes, because your money has less chance to ride out the bumpy patches.

4. Consider a ready-made ISA portfolio

If picking your own investments fills you with dread, you can choose a ready-made collection that matches your timeframe and how much risk you're comfortable with.

A medium-risk portfolio is usually a reasonable fit for timeframes of around five to seven years. Our comparison content shows the average medium-risk ready-made portfolio has returned around 35% after fees over the last five years.

If some of your money has a longer timeframe, a low-cost global tracker fund is worth a look. It sounds complicated, but it's really just a big basket of the world's leading companies wrapped up in one simple product. Providers like Vanguard and iShares are common starting points. These are examples to get you looking, not personal recommendations.

So, back to the 11-year-old, you might split the money three ways. A cash pot for the next two to three years. A medium-risk pot for the GCSE years. And a higher-risk pot for A-levels and university.

5. Choose the right investment platform 

If you want a ready-made portfolio, our comparison tables show you which providers combine decent returns with good service across all three risk profiles.

If you just want a tracker fund, low-cost platforms inside an ISA include Trading 212 and Freetrade. Again, those are examples of the kind of thing on offer, not a nudge towards any one name.

6. Open a Junior ISAs for extra help from family

Got parents who'd like to help? A Junior ISA (JISA) is a tidy way to give everyone a head start.

You can shelter up to £9,000 a year in a JISA, and family and friends can pay in, though you'll usually need to be the one who sets the account up.

Over 10 years, £9,000 a year could grow to around £140,800 in a higher-risk portfolio, assuming an 8% return. And even if the grandparents can only manage £100 a month, compounding quietly does its thing over the years.

7. Invest little and often, not in one lump sum

If you can, pay in monthly rather than once a year. Spreading your contributions means you buy at lots of different prices across the year, rather than risking putting a big lump in right before the market dips.

This is often called "pound-cost averaging". It won't guarantee better returns, but it can smooth out some of the ups and downs.

Practically, a direct debit turns it into a habit you never have to think about, and it can also reduce or wipe out any transaction fees, which is a nice bonus.

8. Use grandparents' gifts to cut Inheritance Tax (IHT)

If it's an option, it's worth talking to parents or other older relatives about chipping in towards fees as a kind of early inheritance. It helps you and the children now, and it can trim a future Inheritance Tax bill too.

The simplest route is the annual gift exemption. Each person can give up to £3,000 per tax year free of IHT, with no minimum survival period. So a couple can give up to £6,000 a year between them, and if last year's allowance went unused, it can usually be carried forward.

For those who can give more, larger gifts can be protected too. The main way is simply to survive the gift by seven years, after which it falls outside IHT. There's also a lesser-known exemption for regular gifts out of surplus income, which can be unlimited in value as long as they're consistent, come from income rather than savings, and don't dent the giver's own standard of living. Investment income can qualify here.

9. Cover the other essentials before you commit

Protecting what you've already got matters too. Critical illness cover and income protection are worth considering, so a health setback doesn't wipe out your income and your plans in one go.

If you've paid off a decent chunk of your mortgage, some people also look at remortgaging to free up some cash.

And finally, do the maths. For a lot of people, a fee-paying school is a genuine life goal. But it shouldn't come at the cost of your own financial future. Neglecting your pension, and all the lovely tax relief that comes with it, really can bite in later life. So prioritise, make a plan, and check the sums actually add up for you and your family before you commit.