What account to open

Greglsh

Greglsh

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Hi All

I want to start saving for my 10 month old son. I will put a few hundred rand a month into this account as well as his grand parents will put money in from time to time. What is the best way of doing this. I bank with FNB, and should I open a 32 day flexi account or a tax free account or something better. I don't want to touch the money for as long as we can so that it can grow but also want to keep any fees to a minimum. Please give me some ideas and maybe some of you have done this for your kids already.

Thanks
 
Greglsh said:
Hi All

I want to start saving for my 10 month old son. I will put a few hundred rand a month into this account as well as his grand parents will put money in from time to time. What is the best way of doing this. I bank with FNB, and should I open a 32 day flexi account or a tax free account or something better. I don't want to touch the money for as long as we can so that it can grow but also want to keep any fees to a minimum. Please give me some ideas and maybe some of you have done this for your kids already.

Thanks
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I started saving for a then 9yo in 2013, for her tertiary education, at first into a SIM (aka Sanlam) Equally Weighted Top 40 Unit Trust, which was then merged with the Satrix Weighted Top 40 Unit Trust (Sanlam owns Satrix) for synergy reasons. I then started contributing monthly to the Satrix MSCI World Equity Feeder Index Unit Trust as well

Still another 6 years to go before she leaves school.

I specifically don't want it in a TFSA.

When she leaves school maybe I'll guide her to open a TFSA and then put the monthly am into that, or maybe I'll do it earlier at 16 or such when I am happy that her tertiary education costs are met.

So in my opinion:
If for a specific goal under 20 years - not in a TFSA
If long term investment over 20 years - in a TFSA
 
Hi

Thanks for the info, I am an EasyEquities user and was looking at this. Supersunbird, any reason why not a TFSA or was it just your preference? My idea of what i wanted to do was save for his high school education so have about 12 to 13 years to save.
 
Greglsh said:
Hi

Thanks for the info, I am an EasyEquities user and was looking at this. Supersunbird, any reason why not a TFSA or was it just your preference? My idea of what i wanted to do was save for his high school education so have about 12 to 13 years to save.
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Because of the stupid lifetime limit imposed on TFSAs and that you can't recontribute what is taken out. If not for that then it would have been the perfect vehicle for such savings.

If it was me I'd just safe it outside the TFSA in whatever EFT/s you want and save other money inside a TFSA for the kids life savings, maybe that they will only use to retire early and comfortably.
 
Thanks supersunbird

Yes it does make it a bit difficult with the limits, will give it a bit of thought, what about using an FNB 32 day flexi notice account it has interest from 6% up to about 7.2 % (interest increases as amount increases)or would the other ideas produce more interest over the long term?
 
Greglsh said:
Thanks supersunbird

Yes it does make it a bit difficult with the limits, will give it a bit of thought, what about using an FNB 32 day flexi notice account it has interest from 6% up to about 7.2 % (interest increases as amount increases)or would the other ideas produce more interest over the long term?
Click to expand...

The notice account would be good for short to medium term goals or as a rainy day fund because low low risk. But that interest rate barely beats official inflation, and there won't be dividends at all. So for your goals I am not sure I would put it in the bank.

I would say either ETFs or index tracking unit trusts. Ssb makes a good point about the limits for TFSA, although there is talk of the limits being raised. The R500K lifetime limit will hopefully increase over the years. Remember you can have a TFSA for yourself and for your kid.


Greglsh said:
Thanks supersunbird

Yes it does make it a bit difficult with the limits, will give it a bit of thought, what about using an FNB 32 day flexi notice account it has interest from 6% up to about 7.2 % (interest increases as amount increases)or would the other ideas produce more interest over the long term?
Click to expand...
 
Greglsh said:
Thanks supersunbird

Yes it does make it a bit difficult with the limits, will give it a bit of thought, what about using an FNB 32 day flexi notice account it has interest from 6% up to about 7.2 % (interest increases as amount increases)or would the other ideas produce more interest over the long term?
Click to expand...

12 years is a long time, and you already on EE and know it, so buy some ETFs (within TFSA in kids name or outside it).

When you get to the last 2 years or 18 months, maybe one can gradually start cashing in parts of the ETFs and make the further monthly contributions cash into the account the ETF cash is going into. Don't cash all in of course, high school is generally a 5 year process and you want the money to continue growing nicely till you cash the last in during Grade 11.

As I said, I personally have a version of Top 40 index and also World Index half half in Unit Trusts for similar goal.
 
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I see on the Easy Equities site they have Easy Equities baskets, are this good and if anybody knows about them which is the basket to go for. I see they have varying risk profiles, some sound good but are they attainable. The 2 I would look at say a loss of up to 15% to a gain of up to 23% over 6 months, the other is a loss of up to 10% to a gain of up to 16% over 6 months?. Otherwise some suggested ETF's. Thanks for the info everybody
 
I'd be pretty pissed if my parents opened an TFSA in my name and ruined it by using the money for my studies. Just saying. If you want to withdraw from a TFSA and "destroy" it's potential by withdrawing from it - make it your own.
 
Hamster said:
I'd be pretty pissed if my parents opened an TFSA in my name and ruined it by using the money for my studies. Just saying. If you want to withdraw from a TFSA and "destroy" it's potential by withdrawing from it - make it your own.
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Agree completely. Using it for something that needs to be paid for before the child is financially independant takes away future choices from that child.
 
Hamster said:
I'd be pretty pissed if my parents opened an TFSA in my name and ruined it by using the money for my studies. Just saying. If you want to withdraw from a TFSA and "destroy" it's potential by withdrawing from it - make it your own.
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Glad it's not just me that thinks this way.

Now tell him what ETFs he should consider looking at. I've said what I'd do....
 
Hamster said:
I'd be pretty pissed if my parents opened an TFSA in my name and ruined it by using the money for my studies. Just saying. If you want to withdraw from a TFSA and "destroy" it's potential by withdrawing from it - make it your own.
Click to expand...

I say yes and no, depends on the reason. All well and good to save for a better education but in todays climate if something drastic happens, rather a home and family than not. I've transferred funds into an account for my two sons and don't intend touching it further BUT I've left the option open should something arise as a family emergency. And if it did, I would certainly fill it back as soon as possible.
 
Kosmik said:
I say yes and no, depends on the reason. All well and good to save for a better education but in todays climate if something drastic happens, rather a home and family than not. I've transferred funds into an account for my two sons and don't intend touching it further BUT I've left the option open should something arise as a family emergency. And if it did, I would certainly fill it back as soon as possible.
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Talking about a TFSA? The issue is one can't fill it back all the way, due to a stupid limit.
 
supersunbird said:
Glad it's not just me that thinks this way.

Now tell him what ETFs he should consider looking at. I've said what I'd do....
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In a TFSA? DIVTRX, NFEMOM, PTXTEN and DBXWD. Quality, income and offshore investment all with caps on how much can be invested into a single share, unlike STXIND and the like.

That's my thinking anyway.
 
Hamster said:
In a TFSA? DIVTRX, NFEMOM, PTXTEN and DBXWD. Quality, income and offshore investment all with caps on how much can be invested into a single share, unlike STXIND and the like.

That's my thinking anyway.
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No, outside a TFSA, for educational savings that will start being accessed 12years from now, but I suspect your answer will and should remain the same.
 
supersunbird said:
No, outside a TFSA, for educational savings that will start being accessed 12years from now, but I suspect your answer will and should remain the same.
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My bad. I'd combine the above with a larger portion in a guaranteed cash cash (or at least revisit the above investments after 8 or so years and then switch them to something that'll guarantee growth and liquidity come year 12).

There's also endowments if you have lump sums you invest but I've got zero experience with them.
 
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