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Education. It’s a vital part of any child’s life, but it costs money. School fees and other related costs can easily eat up a good portion of parents’ salaries. To send your child to a school with average fees will cost you R250 000 in total, from Grade R to Grade 12. If you opt for an upper-income school, you’ll be paying close to R700 000, while private schools are likely to cost you almost R4 000 000.

If your child wants to attend university, that’s another set of fees you’ll be paying. A 3 year Bachelor of Arts degree will cost between R190 000 and R500 000, depending on the university you choose. (Source: BusinessTech)

With that in mind, it might be wise to start saving now to ensure that your child can get the best education they can. There are many options out there when it comes to investments, so it can be quite a challenge to find one that’s right for you.

Saving for your Child’s Future

Before we get into the different option you have for saving for your child’s education, we need to talk about what you need to be aware of when deciding on an investment option:

  • How much do you have available at the end of the month?
  • Can you invest or save regularly, or can you make a once-off lump sum payment?
  • How long do you want to save/invest for?
  • What level of risk are you willing to take in your investment?

Unit Trusts

Investing in a unit trust is fairly easy. You can make either an up-front lump sum payment or smaller monthly payments into the trust. The trust manager then invests that money in bonds and stocks, with the aim of increasing the value of the trust. If you invest in a unit trust through a bank or a financial services provider such as Old Mutual or Sanlam, you can rest easy knowing that there is a qualified person managing your investment in your child’s future.

Why should you consider a unit trust?

  • You want a long-term investment
  • You want your savings to increase faster than inflation
  • You can access your money at any time

List of Unit Trusts:

Does a unit trust sound like it might be the right choice for you? Contact one of the financial service providers above to start investing in your child’s future.

Education Policies

Most financial institutions also offer specialised education policies that you can invest in for your child’s future. These are long-term investments tailored to your goal of saving for future education expenses.

Many education policies are essentially unit trusts - you can make either monthly payments or a once-off lump sum - but designed to pay for education costs. You may have to specify who the student is when withdrawing money, to ensure that the money is used specifically for education.

List of Education Policies:

Tax-Free Investment

SARS allows you to save up to R33 000 per year, to a total of R500 000 in your lifetime, absolutely tax free. You will not pay income tax, dividends tax or capital gains tax on the returns from this investment.

This investment option was introduced in 2015 to encourage household saving and it is perfect for saving money for your child’s future education.

Financial Service Providers offering Tax-Free Investment:

There are many more investment options out there but these 3 are best suited to saving for your child’s future.

Disclaimer: The Careers Portal is not a financial service provider nor a financial advisor. We cannot be held responsible for any investment decisions made based on the advice of financial service providers.

Article by: Conor Engelbrecht

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