Long-term planning for education
Education is expensive now, ranging from R230 000 to R3.2 million after tax, depending on the school and will continue to escalate.
“Parents could benefit from thinking ahead and opening a tax-free investment savings account (TFSA) to help in paying for their children’s education,” says Donna Barnes, product owner for taxfree investments at Nedgroup Investments.
“Investors are able to invest a relatively small amount of money and take advantage of the medium to long-term benefits of compounding, without paying any tax on interest, dividends or capital gains. The additional tax savings these investments offer can also add up and compound over time, growing into a substantial investment, which can go a long way in covering education costs.
“Furthermore, tax-free investments are flexible so, should the money be required in an emergency, it is possible to access it.
“It is also possible to open up a tax-free investment on behalf of a family member or a child.
‘This way, when children turn 18 and take over ownership of the investment they could have a substantial investment that enables them to start their lives without soliciting enormous educational debt.
Barnes concludes, “We have been encouraging investors to explore the savings opportunities that tax-free savings can provide and we have seen very encouraging interest in our tax-free funds since they were launched over two years ago.”
For more information, go to www.itsanobrainer. co.za.