Saving for your child's tertiary education can feel like an impossibility, especially when you think what four years at university is likely to cost 15 years from now. While costs vary, expect to pay about R925,000 for an arts degree, according to one life assurer. But if you put away R680 a month for the next 15 years you would get there, assuming you increase your contributions by 9% a year to keep pace with education inflation. This calculation also assumes that your savings will grow at a nominal rate of 11.8% a year (meaning, a real rate of 5.8% and a 6% inflation rate). Where should you put your money to get a real return of 5.8% a year? John Anderson, head of group client solutions at Alexander Forbes, says you would have to invest in balanced funds with a high equity exposure (65% to 75%) to have a reasonable chance of achieving this target. Tax-free investments, unit trust funds and exchange-traded funds are the products most commonly recommended by financial advisers for s...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.