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What’s the best way to invest R10k for my son’s university education?

And which unit trust fund would be best should I want to invest one?

How can I make the best/most of R10 000 towards my son’s education (university)? He is seven years old. I would also like to know which unit trust fund would be best should I want to invest R10 000 in a unit trust?

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Dear reader,

Thank you for your question! I believe starting to save for your child’s education is one of the greatest gifts you can ever give them!

I am not sure by your question if this is a once-off amount you would want to invest, or if you would be contributing monthly further into this investment. From the way your question is phrased, it does sound as if you’re a currently looking at a lump sum investment only.

Most of the investment platforms have minimum contributions rules – R500 for a monthly premium, and R20 000 for a lump sum. So, your plans around possible future contributions after the initial lump sum will inform which investment product will be suitable for you. A tax-free investment or a voluntary (flexible investment) allows for flexible contributions while giving you control over your choice of underlying investment options, and some of these products also offer lower lump sum investment amounts.

Since you are saving for your child’s tertiary education, you have about eleven years ahead of you before you will need the capital. Because of this, I would advise optimising the benefits of being invested in growth-assets (shares). This way you optimise the return possibilities by having time on your side and benefiting from the compounding effect. Starting to save early on, and of course, benefiting from compounding in the longer term, will help to ensure a successful investment strategy. I would advise adding a monthly contribution to your lumpsum investment to ensure you are saving enough.

It is important with any investment to understand that we first need to choose a suitable investment platform and product that will best suit your needs and contribution levels. Firstly, you need to choose which investment platform you want to invest in. Here you have a wide range of options. My advice will be to choose a LISP (Linked investment services platform). As the fees are transparent and there are no penalties associated with any changes made to the investment. Examples of these platforms include PSG Wealth, Allan Gray and Ninety One. It may also be good to compare the admin fees of a few options.

The success of the investment will ultimately be determined by the investment strategy that is decided on for the underlying funds. Are these funds suited to your risk profile and the investment term (time period) you are investing for? A longer time frame provides you with the freedom of allocating more to shares, as you will have time in the market that can help smooth out volatility along the way.

I will advise working with a financial advisor to determine the suitable needs and timelines for this investment. It is important to have a holistic approach when starting to structure your investment portfolio. There are a few important aspects that need to be taken into account, as this will also have an impact on the education saving goals in the longer term:

  • Are you saving sufficiently for your own retirement at this stage?
  • Do you have an emergency fund in place for yourself/family? If not, the temptation might be to dip into the education savings should there be a crisis.
  • Do you have suitable risk cover in place to protect your own ability to work? Structuring income protection and suitable risk cover is imperative, and even more so if there are children who are dependent on your income.

Do you have any questions you would like answered by registered financial planners?

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COMMENTS   14

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Invest it in a REIT thats well priced. Has a strong balance sheet. Will recover from Covid and pay regular dividends!

REIT is property?

Look at Intu, delprop, L2D … not looking too pretty.

I used to have unit trusts, but it was a waste of time and money.
I since have closed all my unit trust and bought shares in JSE 40 companies and since then, there was clear growth and dividends.

Agree about unit trusts. The fees have a dampening effect on returns. I.M.O. most of the fees charged add very little if any value other than administration. This led me to think, why should administration of R20,000’s worth of funds be any different to R200,000’s worth. Yet the fees are ten times more resulting mainly from market fluctuation / inflation / etc. as opposed to any action for which fees are charged. Using a platform like for eg. Easy Equities makes it even easier to invest directly in shares. Investing some time in researching best dividend payers is not too time consuming nor difficult and way better than the fees invested over and above all other related costs. Glad to see disrupters like Capitec in the banking industry popping up on the investment scene.

Step 1 – open a TFSA in your son’s name with a low-cost provider such as e.g. Sygnia.
Step 2 – invest in a high-equity portfolio that has a good chunk of foreign exposure.
Step 3 – you dont need a financial adviser (with associated fees) or a platform with any fees apart from the e.g. high-equity fund’s internal fees.

the guy has come to you for help and literally you have referred him to a financial advisor.

Keep it in a money market account or similar.

Your name is TheSpeculator but the best you can up with is a money market account. All they give you is plus minus 4%.

You invest = you lose.

Look at the number of casualties in 2020

Dear reader

That initial amount sounds very low to start with.

Stay away from a financial advisor. There is plenty of shares to buy thanks to Covid 19.

Get into Reits, in the next year they will recover. Or some company that crashed due to manipulated accounts. You have time to wait until sanity prevails and jail terms are served.

Take a punt, and put HALF into Bitcoin, the remainder into shares.

I am in the exact same situation, and that’s what I’ve done (and damn sorry I didn’t do this a decade ago when the kids were born – I would have ALREADY completely solved that investment problem, and then some!).

Invest in RSA Retail Savings Bonds. No fees, excellent return and low risk.

You can invest if you bank with capitec. They have EasyEquities. I think you save on brokerage fees when investing from the capitec banking app. They have the RSA us as well as Australia markets including tax free savings and a retirement annuity.

#Bitcoin will be the Biggest Finance News GLOBALLY in 2021;
2019: 100%;
2020 : 262% (YTD);
2021 : 300%?
Investors by Year
2019 – Billionaires;
2020 – Wall Street;
2021 – Pension Funds, ETF & Return of Retail Market?

Take responsibility & learn to take care of your own funds;
Learn well and you will outstrip any financial advisor by a significant margin.

End of comments.

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