/ 18 March 2010

Saving for your child’s education

Currently university education is about R10 000 to R25 000 per annum — for tuition alone. If your child was born in 2008 and goes to university in 2027, you are likely to need about R400 000 for tuition alone per child.

A very low-risk, low-cost way to save for your child’s tertiary education is to invest through Fundisa. This is a joint initiative between the government and the unit trust industry. The government tops up your annual savings by 25% up to a maximum of R600 per year. So basically for every R40 that you contribute to the Fundisa Fund each year, the government will contribute an additional R10. This means you are guaranteed a 25% return before even the growth in the underlying investment, which is in fixed interest (cash and bonds).

There is no other product in the market that can guarantee these returns. However, because the bonus is capped at R600, the optimal monthly investment is R200per month. For further information you can go to the website www.asisa.co.za/fundisa.

Note that the website fundisa.co.za is NOT related to this product.