Guiding consumers since 2009

Consider giving education this festive season

By Staff Writer
With the December holidays edging closer, most people are already thinking about what to buy their loved ones. However, with consumers still keeping a close rein on their purse strings, this festive season is a good opportunity for South Africans to consider longer lasting gifts for their children.

A recently published festive season spending survey by Deloitte showed that 62% of South African shoppers indicated they would spend the same or less than they did last year over the holiday season, while 78% said they would not buy on impulse.

According to Anil Jugmohan, Investment Analyst at Nedgroup Investments, with parents choosing their gifts more carefully in the current economic climate, one of the best presents one can offer their child is the opportunity for a good education.

"By allocating a portion of your holiday and festive season spending money to a savings or investment fund for your child's education, parents are offering one of the most valuable gifts there is to give. It shows your children that you care enough about them to invest in their future."

Jugmohan says parents should consider all the various saving options that are available to them. One way to invest in education this festive season is through Fundisa - a joint initiative between Government and the unit trust industry. It aims to encourage and incentivise individuals to save for children's tertiary education by supplementing your contributions with additional funds.

"By investing relatively small monthly payments - the amount it would cost to buy a small gift for example - the Fundisa fund can accumulate an attractive lump sum by the time the child is ready for university," he says.

For every R4 that you contribute to the fund the government and unit trust industry will contribute an additional R1. This additional contribution is limited, however, to a maximum of R600 per child per year, but investors are encouraged to put as much into the fund as they wish since it earns very competitive rates of interest. The government bonus also earns interest as well, explains Jugmohan.

"This becomes a very significant contribution in the long-term and is one of the reasons that we support this initiative," says Jugmohan.

Other savings vehicles that Jugmohan says that many parents consider are unit trusts, endowment policies and trust funds.

"Unit trusts are collective funds which allow investors to pool their money into a single vehicle that may include various asset classes. This spreads their risk, and will also allow parents the benefit of professional fund management" says Jugmohan.

According to Jugmohan, an Endowment Policy may work well for people who need more discipline when saving for their children's education. The downside to these products are the inherent inflexibility and higher costs though.

The popular saying, ‘knowledge is power' is especially true in Africa. Education is one of the most significant avenues through which childhood aspirations can be realised. "While saving for your child's education may be the primary goal huge satisfaction comes from watching them reap the benefits that a college or university degree offers," says Jugmohan

Recent Articles

Featured It’s possible to change your marriage regime

Many people wed before they sign an antenuptial contract (ANC). This is especially practiced by people in customary marriages and those not clued up about the ANC. The law says if there’s no ANC before the wedding takes place, the marriage will automatically be in Community of Property. 

Keep this in mind when taking out new financial products

Adding a product to your personal finance portfolio, such as insurance or an investment, is a big decision. We found out what you should keep in mind before taking out a new product, how you can assess the products you already have, and how you can generally improve your financial position.

Are you in debt denial?

With debt levels increasing at 13% more than income levels, South Africans are more debt-stressed now than arguably ever before. This is iterated by the National Credit Regulator’s (NCR) report that nearly half of credit-active consumers in South Africa have damaged credit records. However, only a few seek the necessary help.

Why should you invest in a mutual bank?

Often when people think about banking, they always think about commercial banks. Mutual banks hardly come to mind, but these banks offer investment opportunities that are often overlooked.

 

Deals

Aurora Spa 100-minute Treatment Special

Price: R449
When: Until 31 March
Where: Century City

Woodstock Grill and Tap Steak Thursdays

Price: R100
When: Thursdays
Where: Woodstock

KFC 5+5 Special

Price: R65
When: Until 25 February 2020
Where: Nationwide