Which investment vehicles to safe for children's education?

handyman007

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Mar 1, 2017
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Hi.

What are you using to save for your children's education? TFSA in their own name?

Will be needing the funds in 13-15 years.

Thanks.
 

wir

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Mar 11, 2008
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Wouldn't a TFSA in their name be a terrible idea? If you max out the account, and withdraw the balance when they start university, then they would never have access to tax-free investment platforms when they start earning their own salary.

Imagine you start work and find out you can't ever use a TFSA because your parents wanted to save a buck in paying for university.
 

Pegasus

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May 17, 2004
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Wouldn't a TFSA in their name be a terrible idea? If you max out the account, and withdraw the balance when they start university, then they would never have access to tax-free investment platforms when they start earning their own salary.

Imagine you start work and find out you can't ever use a TFSA because your parents wanted to save a buck in paying for university.

Saving for your kid terrible?

By the time they are out of uni, the tax free account may have very different requirements.
 

Speedster

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Wouldn't a TFSA in their name be a terrible idea? If you max out the account, and withdraw the balance when they start university, then they would never have access to tax-free investment platforms when they start earning their own salary.

Imagine you start work and find out you can't ever use a TFSA because your parents wanted to save a buck in paying for university.
You're not going to max it out in OPs time span.
 

deweyzeph

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I would open up an offshore bank account in dollars or pounds and send regular contributions to it. Even if the account earns little or no interest you will score big on the depreciation of the rand. And if you're not a currency trader any currency gains are tax free.
 

Stonemason

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Mar 13, 2017
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When my daughter was born, I took out a policy at Sanlam specifying the amount that I wanted when she was 18.
At age 18 they paid out the specified amount and my daughter had enough money to buy a new small car, pay for university and she had some money left over at the end.

The trick is just to accurately estimate what university education is going to cost in 18 year's time.
 

Mordecai

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Aug 4, 2013
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TFSA with overseas based ETF. I opened an account for my sons when they where born. Went with the Sygnia 4th Industrial Revolution Global Equity fund. Did really well and more than doubled the investments in a very short time.
 

mr_norris

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Using your kids TFSA is a stupid idea, I'm sorry. It doesn't matter that the limit may or may not be reached. What contributions you take out cannot be replaced. You are using their lifetime allowance to grow the fees you need to pay. Use your own TFSA, a savings account, or invest the money elsewhere and pay the tax.

I would be pissed if I finished varsity and wanted to start my own TFSA but couldn't because I had no or bugger all limit left.

I would feel different if you guys wanted to build them a solid nest egg to give them when they're adults. A fully funded TFSA by the time they are ready to start working would be magical, left even longer could mean early retirement for them.

Can't believe people in this thread that suggested using TFSA's to pay for their education are allowed to breed.
 

Neo_X

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Can't believe people in this thread that suggested using TFSA's to pay for their education are allowed to breed.
well ok.
why not then use your own TFSA to fund for your children?
yes it will be powerfull to add to your retirement, but if the tax savings can be used to provide a better return for your children (especially considering that education inflation is much greater) then why not
 

potter123

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Nov 8, 2010
Messages
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It is not a good idea to use your kids TFSA for university fees/education savings.

Money invested in a TFSA should stay as long as possible so it gets the maximum benefit from being tax free. 15 years is not a sufficient time period for this. Additionally, using it for this purpose deprives them of the opportunity to use their own TFSA for their own savings.

Any other investment vehicle would be better. Over 15 years, I'd recommend a low cost global ETF. Something like the STXWDM or the ASH1200. If you want some local exposure, can supplement with the STX40.

I think you should be able to open a separate account on easy equities for your child and buy these there.
 

Speedster

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Using your kids TFSA is a stupid idea, I'm sorry. It doesn't matter that the limit may or may not be reached. What contributions you take out cannot be replaced. You are using their lifetime allowance to grow the fees you need to pay. Use your own TFSA, a savings account, or invest the money elsewhere and pay the tax.

I would be pissed if I finished varsity and wanted to start my own TFSA but couldn't because I had no or bugger all limit left.

I would feel different if you guys wanted to build them a solid nest egg to give them when they're adults. A fully funded TFSA by the time they are ready to start working would be magical, left even longer could mean early retirement for them.

Can't believe people in this thread that suggested using TFSA's to pay for their education are allowed to breed.

Well how about they rather finished varsity with a significant study loan against their name?
 

Speedster

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It is not a good idea to use your kids TFSA for university fees/education savings.

Money invested in a TFSA should stay as long as possible so it gets the maximum benefit from being tax free. 15 years is not a sufficient time period for this. Additionally, using it for this purpose deprives them of the opportunity to use their own TFSA for their own savings.

Any other investment vehicle would be better. Over 15 years, I'd recommend a low cost global ETF. Something like the STXWDM or the ASH1200. If you want some local exposure, can supplement with the STX40.

I think you should be able to open a separate account on easy equities for your child and buy these there.
I guess what is true is that apart from dividend tax there is minimal tax savings for a kid using a TFSA. A stock standard EE account will do just as well
 

Jehosefat

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Well how about they rather finished varsity with a significant study loan against their name?
If you can save enough in a TFSA for their education, you can likely save almost enough to cover the cost of their tuition outside of a TFSA without negatively impacting their ability to save for their own retirement.

It honestly seems incredibly selfish to use your child's tax-free savings limit to benefit yourself.
 

Speedster

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If you can save enough in a TFSA for their education, you can likely save almost enough to cover the cost of their tuition outside of a TFSA without negatively impacting their ability to save for their own retirement.

It honestly seems incredibly selfish to use your child's tax-free savings limit to benefit yourself.

I don't see anyone saving for their children's university (or other education) as either being selfish or doing so for their own benefit.
 
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