Saving for education

[Maverick154]

Hi Guys.

So I have asked something similar here before. I want to know what your thoughts are on the following. I want to save R20,000 for my child's education in the future (5+ years from now). I have decided to invest this money directly in a unit trust.

This will be a lump sum investment and from time to time I will add odd amounts to this (so there will be no monthly contribution). Lets say for example that I go with the Coronation Industrial Fund or Financial Fund to do this. Can you guys comment on this? The other option that I have is I can use this money to pay my house off quicker and then I have more money available later, but this does not feel like the best decision.

So can anyone recommend anything else other than this? Perhaps there is a better way to do this seeing as I will be taxed on any returns this investment will make (can put it into an Endowment but not to keen on this).

Thanks

 

[heartbroken]

Not sure about Coronation, but with Satrix the industrial fund has far outperformed the financial fund. I suggest you look at fact sheets for both to compare the returns. Also make sure the fund fits your desired risk profile - some of these funds are very aggressive.


EDIT: On the home loan issue - some of these funds can hit 20% returns, where your home loan only saves you 9%, so you can still make up to 11% more by investing rather than dumping funds in the home loan. But again - depends on your desired risk profile, the home loan is a guaranteed safe bet.

 

[Bar0n]

Hi Guys.

So I have asked something similar here before. I want to know what your thoughts are on the following. I want to save R20,000 for my child's education in the future (5+ years from now). I have decided to invest this money directly in a unit trust.

This will be a lump sum investment and from time to time I will add odd amounts to this (so there will be no monthly contribution). Lets say for example that I go with the Coronation Industrial Fund or Financial Fund to do this. Can you guys comment on this? The other option that I have is I can use this money to pay my house off quicker and then I have more money available later, but this does not feel like the best decision.

So can anyone recommend anything else other than this? Perhaps there is a better way to do this seeing as I will be taxed on any returns this investment will make (can put it into an Endowment but not to keen on this).

Thanks

Is this for university or school? University will cost you roughly 30k per year.

 

[Analog Revenant]

Might be worth to wait and see what the tax free savings account will offer. Something I read this morning:

The tax-free savings account offers individuals the opportunity to invest in a variety of asset classes. Regardless of the type of proceeds (interest, capital gain or dividends) no tax will be levied.

This is a great way for parents with young children to invest money on their behalf (in their own name). If the maximum contribution is utilised a child could have a “trust fund” in excess of R1.5 million by the time he or she turns 18 if no withdrawals are made.

http://www.moneyweb.co.za/moneyweb-tax/why-the-negativity-about-taxfree-savings

 

[Maverick154]

Not sure about Coronation, but with Satrix the industrial fund has far outperformed the financial fund. I suggest you look at fact sheets for both to compare the returns. Also make sure the fund fits your desired risk profile - some of these funds are very aggressive.


EDIT: On the home loan issue - some of these funds can hit 20% returns, where your home loan only saves you 9%, so you can still make up to 11% more by investing rather than dumping funds in the home loan. But again - depends on your desired risk profile, the home loan is a guaranteed safe bet.

The Industrial Fund of Coronation out performs the Financial one, so was leaning more towards the Industrial. I am not too phased by high risk since this will be invested over a long term period.

 

[Maverick154]

Is this for university or school? University will cost you roughly 30k per year.

This will be either for High School or Uni, so 5+ years as I am not sure which one I will need the moeny for, if either or if education at all. So I want to keep this kinda flexible in terms of what it will be used for.

 

[Colin62]

Is this for university or school? University will cost you roughly 30k per year.

Tuition alone is around R30 000 a year. Then the little buggers need accommodation, food and transport. Just the accommodation and food is costing me another R80 000 a year at this stage.

 

[heartbroken]

Is this for university or school? University will cost you roughly 30k per year.

Yup, it's expensive. So starting with savings of R20k is a lot better than starting on savings of R0k

 

[fruitbat]

This will be either for High School or Uni, so 5+ years as I am not sure which one I will need the moeny for, if either or if education at all. So I want to keep this kinda flexible in terms of what it will be used for.

20k is a good start.... but make sure you think big!

My 3-4 year old's fees are around 40/year... and when she hits grade 1, i think it goes up to 60-70. Yes this is on the expensive side of things... but im just giving you something to think about!