Children’s education: Start planning today

Getting your child into the best possible school requires more planning than many people realise. It could involve a savings and investment plan that starts soon after your child is born, or even purchasing property in the desired feeder zone for a particular public school.

It’s crunch time for parents looking to enrol their children for the 2020 school year. In some areas of South Africa, online applications are already closed. Many private schools have long waiting lists and most public schools in South Africa are already oversubscribed.

Long-term savings and investment

If you’re able to start planning for your child’s education needs as soon as they’re born, you will have time on your side and can consider the best investment opportunities and savings products. The cost of education increases every year, so it’s important to find an inflation-beating investment that will help you keep ahead of this growth. Some public schools currently charge well over R30 000 a year.

When it comes to selecting your investment path, chat about the following with your investment advisor:

  • Determine how long you will be investing money. In other words, are you saving towards university or for primary and secondary schooling?
  • Are you able to increase contributions over time?
  • Would you want to access those funds before the investment reaches full term?

African Bank offers a number of savings and investment products that meet different needs:

  • Fixed Deposit: With terms ranging from three to 60 months, a once-off lump sum deposit could earn an interest rate of 10.75% per annum, which is equivalent to 13.33% per annum calculated on expiry after 60 months. The rate offered is based on the terms – the longer you invest, the higher the rate. Once your investment policy term expires, you can reinvest your monies saved or use it to pay for your child’s educational needs.
  • Tax-Free Investment: Earn maximum growth and interest over a 12-month period, without having to pay tax on any growth you’ve earned. (African Bank’s rate is 8.67%). There is no limit to the term of your Tax-Free Investment account and you are free to make as many deposits as you like, up to R33 000 per year and up to R500 000 in a lifetime. At African Bank, you are able to access your funds during the anniversary month of the account being opened.
  • Notice Deposit: With African Bank’s Notice Deposit account, you’re free to make monthly deposits from as little as R100 per month and can access your funds with a notice period of seven days, 32 days or 90 days. The interest rate on a Notice Deposit accounts varies according to prevailing market conditions.

(Rates correct at time of publication.)

Property investment

With feeder zones dictating access to certain public schools, many parents are considering purchasing property based on the location of the most desirable institutions. Living close to your child’s school also makes sense when it comes to battling traffic for drop-off and collection, as well as easy access to the school for extramural activities.

This approach also requires considerable planning. It often takes more than three months to sell a home, followed by approximately another three months to register the transfer of the new home. If you’re looking to have your child placed in a new school in 2021, you would need to consider selling your current home and buying a new one early in 2020.

African Bank offers a wide variety of savings and investment products that could help you save for a bigger deposit for your home loan. Remember, the bigger your deposit, the smaller your home loan repayments will be.

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