Gift to child could turn into R20m

Imagine parents who start investing for their child on the day he/ she’s born. If they put away just R100 every month and it grew at 10% per annum, by the time their child turned 21 the investment would be worth over R85 000.

That’s a great headstart in life to be give a child. If they keep that money invested and don’t even add to it, by the time they retire at 65 it would be worth nearly R7 million.

This shows that time and the power of compounding would turn this money into something far more meaningful than any other gifts parents might give their child.

Imagine if those same parents had the buy-in of their child’s aunts, uncles and grandparents? If six each contributed an additional R200 every year on the child’s birthday and another R200 each at Christmas, that investment would be worth over R250 000 by their 21st birthday. If he/she kept it, by the time they reached retirement it would exceed R20 million.

Unfortunately, most investment platforms don’t enable this kind of approach. Very few accept investments as small as R100 a month and there can be a lot of admin involved in adding contributions from other people.

The robo-advice platform recently launched by OUTsurance, OUTvest, makes this very easy. Its innovative approach is based on seeing every investment as a way to meet a goal, for example, saving for a child’s education.

It offers a solution to a specific need rather than being a black box into which you put money and hope what you get out will have increased in value. “The idea behind the platform is that you can create goals for anything,” says OUTvest’s Grant Locke.

Users can choose to to make any of their investments a “crowdvest” goal. This creates a unique page for that goal with a URL that can be shared with others. Friends and family can be allowed to donate directly into a goal.

The web page has a credit card or instant EFT interface allowing people to pay directly into it. OUTvest accepts investments from R100. It charges 2.5% on every deposit from an outside person.

You could also set up a goal for university education. “If we can rather get people to help towards achieving long-term goals, I think that can make personal investment much more relevant in everyone’s daily life,” it says.