Do you have an investment fund for your kid’s education? If so, how did you choose the right managed fund? One listener phoned into Talking Lifestyle’s On the Money, asking for advice.

Emma 34, and her husband, 40, decided they would invest into an education fund for their two young kids, but were unsure where to start.

According to Paul Rickard of the Switzer Report, there are numerous education savings plans to choose from, but they don’t tend to be his favourite.

“There are particular education savings plans around but I’m not a huge fan because they have some fairly strict requirements of when you can take the money out.” He said.

In his view, investment bonds issued by insurance companies could be the better choice for those wanting a bit more flexibility with their savings.

“Investment bonds… are very effective ways for saving for a child, provided you’re going to hold them for more than 10 years with no impact on yours or your child’s tax situation.”

Investment bonds, also called insurance bonds, allow you to set up an insurance bond from as little as $1000, with the option of adding additional contributions. At the end of the ten years or longer, you can nominate whether the funds go to your child or stay with you.

The money in investment bonds can be withdrawn tax free, known as a tax paid investment.

“They are called tax paid investments... I think they are a very tax-efficient ways to save for the long term,” He said.

Click above to listen to the full interview.