Saving for child's future

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Radorn

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Hi All,

Got a small human now and want to start saving for her future.

What are good products to look at with maximum return? (if it helps I am a FNB and PPS client).

I want something which doesn't require a big lump sum deposit and I can monthly contribute to it and leave it be for the next 20ish years.

Should I start just with a normal savings account or TFSA? Maybe move it elsewhere when there is more money in it after a year or two?

So many choices and I don't know what's best.
 
you get educator policies , some are insurance against loss of income or dissability and a savings option. But what I found to be a better option for the insurance is to take out a 300 rand life insurance policy cause then if you die kids get cash to study anyway. But as for savings you get the educator savings plans which are nice becuase for about 1000 rand a month it builds up at an okay rate. and they pay the school directly which sually saves you 20% .

I put the saving sin my flexi bond though. so you save up for kiddo and lower your interest on house
 
WorldWarII said:
you get educator policies , some are insurance against loss of income or dissability and a savings option. But what I found to be a better option for the insurance is to take out a 300 rand life insurance policy cause then if you die kids get cash to study anyway. But as for savings you get the educator savings plans which are nice becuase for about 1000 rand a month it builds up at an okay rate. and they pay the school directly which sually saves you 20% .

I put the saving sin my flexi bond though. so you save up for kiddo and lower your interest on house
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Thanks for the advice. Didn't even think about the house/bond part. Thanks.
 
I ready this and though it was an interesting approach for saving for a kids future. You could do this with any other number of funds not necessarily Sygnia

https://twitter.com/x/status/1144585969263247360

"There is a lot of interest in saving on my timeline. So here is tip of the day. If you save R33 000 in a tax free savings account invested in a fund like Sygnia Skeleton Balanced 70 , for the first 3 yrs of your child’s life, you will have enough to pay his university fees at 18 "
 
And just to add, university if probably cheaper then most private schools these days
 
Do not even THINK about investing if you still have any debt what so ever. No way in hell you will get 10, 11,12% reutrns every year for the next 20 years from anything in RSA. Rathey pay off that debt.

And stay far FAR away from any "policies" from any of the big companies like Old Mututal, Liberty etc. they are designed to milk you and do not give you one cent of extra benefit. Rather invest in things like ETFs and good unit trusts.
 
Gaz{M} said:
Do not even THINK about investing if you still have any debt what so ever. No way in hell you will get 10, 11,12% reutrns every year for the next 20 years from anything in RSA. Rathey pay off that debt.

And stay far FAR away from any "policies" from any of the big companies like Old Mututal, Liberty etc. they are designed to milk you and do not give you one cent of extra benefit. Rather invest in things like ETFs and good unit trusts.
Click to expand...

It depends on what the debt is used for. If you have a bond for rental properties and your interest rate is around 9.5% and your marginal tax rate is around 40%. It might be better to keep the debt as long as possible because the true costs will be around 6%. So a tax free saving might be a good idea. I know pps is good with income protection.

Yea if you don’t like to play the insurers game it’s better not to use them.
 
Ecco said:
I ready this and though it was an interesting approach for saving for a kids future. You could do this with any other number of funds not necessarily Sygnia

https://twitter.com/x/status/1144585969263247360

"There is a lot of interest in saving on my timeline. So here is tip of the day. If you save R33 000 in a tax free savings account invested in a fund like Sygnia Skeleton Balanced 70 , for the first 3 yrs of your child’s life, you will have enough to pay his university fees at 18 "
Click to expand...

Sounds like bistro mathematics to me. Beating (real) inflation by such a large margin is more than just a little unlikely.
 
cguy said:
Sounds like bistro mathematics to me. Beating (real) inflation by such a large margin is more than just a little unlikely.
Click to expand...

So based on historical data I guess it would be ok.. but reality in SA is there are two factors ie inflation and currency devaluation. Thing to remember is that university education is highly dependent on professors who are paid at competitive international rates at the big universities. This is why the cost per year goes up more than inflation typically.

This, currency devaluation, comes in waves with most expecting 30% in the next 6-9months as US inflates out of problems yet again like most chronic debtor countries do. So unless there are some rand hedges u lose out.

Then there is the period.. 18yrs! That’s a long time and US dollar will be on its knees as the debt repayments then will be the biggest item on their expense sheet. But leave that as a problem to watch and think about in 10yrs time when cracks appear.
 
Guess its possible

If she can guarantee 11% returns or more
Also giving it the benefit of the doubt that you add the money at the start of the year
and the deposit and all receives the full benefit.
Assuming its a TFSA (so no div tax, interest tax or CGT).
Caveat would also be that once the values are withdrawn you cannot re-invest into the TFSA again

I guessed University fees at a R200,000 (in total, not per year) in todays money and inflation thereafter of 6%
Not sure how accurate the R200k is.


1565265734421.png
 
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Contributing every year

Think the point though would not be to just put in 33k per child per year for only 3 years,
but with a 4% return (as an example) and contributing every year.

1565266250852.png
 
Gaz{M} said:
Do not even THINK about investing if you still have any debt what so ever. No way in hell you will get 10, 11,12% reutrns every year for the next 20 years from anything in RSA. Rathey pay off that debt.

And stay far FAR away from any "policies" from any of the big companies like Old Mututal, Liberty etc. they are designed to milk you and do not give you one cent of extra benefit. Rather invest in things like ETFs and good unit trusts.
Click to expand...

Devil's advocate here: Save for education in your kid's name in a TFSA, default on your debt if it gets bad in RSA
 
Ecco said:
I ready this and though it was an interesting approach for saving for a kids future. You could do this with any other number of funds not necessarily Sygnia

https://twitter.com/x/status/1144585969263247360

"There is a lot of interest in saving on my timeline. So here is tip of the day. If you save R33 000 in a tax free savings account invested in a fund like Sygnia Skeleton Balanced 70 , for the first 3 yrs of your child’s life, you will have enough to pay his university fees at 18 "
Click to expand...
necro perhaps but I wonder what she/anyone thinks about this statement now.
 
surface said:
necro perhaps but I wonder what she/anyone thinks about this statement now.
Click to expand...

Terrible Idea. TFSA for a child should be 100% equity and the child should keep it for 60 years if possible.

If you do that, they are likely to be in a position where they will never need to save for retirement.
 
Scooby_Doo said:
Terrible Idea. TFSA for a child should be 100% equity and the child should keep it for 60 years if possible.

If you do that, they are likely to be in a position where they will never need to save for retirement.
Click to expand...
On the forum, there are lot of suggestions on TFSA for minor child. I am not sure if that is a good idea considering one deprives the child of her own TFSA contribution.
 
surface said:
On the forum, there are lot of suggestions on TFSA for minor child. I am not sure if that is a good idea considering one deprives the child of her own TFSA contribution.
Click to expand...
I really don't get this logic. What difference does it make as to whether it's the parent's or kid's money going into the TFSA?
 
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