A commitment to investing smartly now means you can see your child's potential fulfilled. Now that's what parents are for.
How much to invest?
That will depend on the kind of plans you are preparing for. For example, if you are planning to fund a four year degree that costs R40 000 per year now and your child is new born, an investment of around R1100 escalating at 6% per year should cover the cost of the degree when the time comes.
Having the cash available in advance when it is needed is far better than needing to borrow the money or to cut back on lifestyle expenses to squeeze through the university years. And it's a huge advantage to your child to start his or her career without the burden of a student loan.
What investment vehicle should you use?
You need something that can adapt to changing plans. Avoid the "Education Plans" in the retail market - these are nothing more than endowment policies with a new label. They are generally expensive and not very flexible.
Get a qualified financial advisor to put an investment together for you using unit trusts. This will allow you to tailor the risk/return profile, cut costs and have an investment that can allow changes in contribution, additional lump sums, full or partial withdrawals and temporary stoppage of payment - all without penalty costs or other drama.
Investing for your child's future is not expensive...it's priceless.
You should never tell a child their dreams are unlikely or outlandish. Few things are more humiliating, and what a tragedy it would be if they believed it.
Rita Ghatourey
