You South Africa – 29 August 2019

Your savings plan shouldbeanchored

n sensible and realistic ambitions for

your children, says Kim Potgieter, a cer-

tified financial planner and life planning

irector at Chartered Wealth Solutions.

“Ask yourself if attending a private

chool is essential for your child. Are

randed clothing or extravagant birth-

ay parties necessary?”

It’s natural for parents to want the

est for their kids. “But at what ex-

ense?”Potgieterasks.“Whatareyou

willingtosacrificeas a family? You don’t

want to be so busy working and chasing

money to fund the grand ambitions you

have for your children that you end up

not spending time with them.”

Don’t live beyond your means and

have a clear strategy when it comes to

saving. “You also need to consider your

own investments and savings,” she says.

“Remember to keep contributing to

your retirement funds and investments

tosafeguardyourownfinancialfuture.”

THE BIGGER PICTURE

GALLO

IMAGES/GETTY

IMAGES

bankaccount,a unit-trustinvestment,

ora JSE-listedexchange-tradedfund,

amongotheroptions.Youcanopenone

easilyviayourbank.

Themajorbenefitisthatthemoney

investedina TFSAisn’tsubjecttotaxon

anyinterest,dividendsandcapitalgains.

Buttherearelimits– thetotalannual

contributioninataxyearmaynot

exceedR33000,whilethetotallifetime

contributionmaynotexceedR500000.

Anotheradvantageofa TFSAis it gives

youtheflexibilitytomakecontributions

if andwhenyoucan.Youcanalsowith-

drawfundswheneveryouchoose.

Thesecanofcoursealsobedisadvan-

tages,soyouhavetobedisciplined.It’s

notadvisabletowithdrawmoneyasthis

underminesyoursavingsgoal.

Asit’sinyourchild’snameit getsthem

involvedandgivesparentsanopportu-

nitytoteachtheirchildrenaboutinvest-

ing,thecostofeducationandhowtopay

forit,Ingramadds.

Sidakisaysif youhavea five-yearwin-

doworlongerbeforethefundsareneed-

ed,youshouldconsidera balancedfund

witha higherallocationtogrowthassets,

suchasequities.“Thiswillensureyour

moneyworksforyouduringtheinvest-

mentperiod,”shesays.

Anequityinvestmentgenerallyrefers

tothebuyingandholdingofshareson

thestockmarket,andif you’renotsure

howtodothisit’sbesttospeaktoa fi-

nancialadviser.

ISTHEREANIDEALAMOUNT

PARENTS SHOULD BE SAVING?

“This is always difficult to calculate be-

cause we can never save enough,” Ingram

says.Buthesuggestssavingatleasthalf

thecurrentcostofschoolinga year.

“Forexample,if schoolfeesarecur-

rentlyR25 000 a yearandyou’vejust

hada child,trytosaveR12 500 a

year,”hesays.“Hopefullythe

capitalwillgrowovertime

soyouhaveenoughtopay

allthecostswhenyour

childstartshighschool.”

Sidakisaystheamount

yousavecan’tbethe

sameforeveryoneasit

dependsonyourbudget

and goals. “If saving for

your child’s education is im-

portant to you, save as muchas

possible, as frequently as possible,”

she says.

ARE THERE PARTICULARLY

GOOD SAVINGS VEHICLES

IF YOU’RE A LATE STARTER?

If you have limited time to save, you

might want to consider less volatile sav-

ing options such as notice deposits

through your bank, Sidaki says.

“Whichever route you take, ensure it’s

appropriate for your circumstances,” she

adds.

“Don’t underestimate the value of con-

sulting a professional who’ll be able to

assess your financial situation and pro-

vide you with options that best suit your

needs.”

Ingram suggests the same vehicles as

for late starters. “I like unit trusts and

tax-free savings accounts,” he says. “As

well as platforms such as EasyEquities,

which makes it easy to buy shares and

exchange-traded funds.”

THINGSTOKEEPINMIND

S“Always ensure the amount you want

to save for your child’s education is

manageable,” Sidaki says. “You

needto ensure you’re able to

sustain the contributions

over time.”

SWhen you have extra

money, such as from

a raise or a bonus,

consider committing

some (if not all) those

funds towards sav-

ings instead of spend-

ing it, Sidaki suggests.

S“Yourabilitytogener-

ateanincomeisyourbig-

gestasset,” Sidaki says. It’s vital

to make sure your salary is protected

in the event of you losing employment,

being injured or dying. Speak to your

broker to make sure you’re adequately

covered.”

SParents should question products

sold as “education policies”, Ingram

says. “These are usually endowments

that have been given a fancy name and

theyoftencarryhighcharges,which

meansthey’renotalwaysthebest

option for saving.”

SBe careful of upfront commissions

when using a financial adviser, says

Stephanie Bakhuis, certified financial

planner and retirement specialist at

Chartered Wealth Solutions.

“If, for example, an adviser charges

3% upfront on your investments,

and you contribute R1 000 a month,

only R970 goes into the investment.

The compounded effect of this can be

significant.” S

There are

savings

vehicles to

suit the

pocket of any

parent

AveragepublicprimaryorhighschoolfeesthisyearareR37700,accordingto

OldMutual.ThecompanypredictsthiswillgrowtoaboutR97 400 in2030.

DID YOU KNOW?

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