There a many different investment vehicles you can use to save for your child’s education.
Tax free savings account
You are able to save up to R 30 000 p.a. per taxpayer into a tax-free savings account. All future growth of
this fund will be free of tax. The only negative when choosing a tax-free savings account, is that should you
withdraw funds from this account you are unable to replace the capital to continue growing it tax-free.
An endowment is a long-term investment and you can only withdraw from this account after a period of five
years. If you need funds sooner you will pay penalties to withdraw from it. Endowments are often marketed as
tax free investments, but the investment is only paid to you after a 30% tax rate. If your marginal tax rate
is lower than 30% it might be advisable to use an alternate investment vehicle.
Unit Trust Investment Account
Unit trust accounts give you exposure to the market by allowing you access to shares and other
asset classes. When you consider this investment vehicle you need to have a long term vision.