THERE is a good chance that your child can study at a tertiary institution after matric.
Mellony Ramalho, group executive for sales and branch network at African Bank, said while not all kids will get to study at university, parents still need to save for their education.
“Parents always have the best intentions, with most of us vowing to put away a certain amount of money every month into a savings account meant for our kids.”
Despite this, life’s challenges can often get in the way, which means you’ll need to dip into your savings to pay for medical emergencies or car repairs.
Suddenly, your child is ready to attend varsity but you now can’t afford it.
Ramalho said that’s why students end up taking out expensive study loans.
“If you don’t want this to happen, it’s important that you start planning for your child’s future now.”
The best way is to invest in a fixed deposit that allows you to add money over time.
“The interest rate is higher than what you would receive if you simply set some cash aside in a basic savings account.
“The more money in the account, the higher the interest rate will be and the more the funds grow over time.”
You choose a time limit for your fixed deposit – between three and 60 months. But once inside money can’t be touched until the time limit ends.
A tax-free investment account is another option. It allows you to get a full investment return of up to R30 000 per annum and R500 000 over your lifetime without being taxed on the money earned.
Instead of the usual seven-, 32- or 90-day notice, the account has a one-day notice period. The notice period can only be accessed once a year during the anniversary month of the account being first opened. The minimum opening balance is R500.
