Education Planning
The rising cost of education makes it imperative for parents to start saving at
the earliest possible time. Ideally, that's just after your child is born. But,
if that's not possible, then there's always the next best thing - now.
Complicating matters is the fact that your savings or investments are no longer
confined to funding tertiary education. Nowadays you need to make provision for
school (primary and high) as well as pre-school! Depending on your choices (type
of school, degree or diploma) you will need a small fortune. But, with the right
plan, an early start and a little bit of investment discipline it is not
impossible.
Education Solutions
Old Mutual has not singled out an individual product as the ideal solution to
education planning. Instead we offer you a choice of investments designed to
suit your pocket, risk profile and investment term.
The solutions are:
- Education Care Plan – an
affordable, long-term education solution. Access to funds occurs after 5 years.
Minimum investment period is 10 years although limited access to funds is
available after 5 years.
- Max Investments – offers a choice of
fixed or flexible payment options and a selection of tax options to suit your
personal circumstances.
- Unit Trusts – this investment vehicle
enables you to invest on a monthly basis or once off with a lump sum and for any
amount of time. Due to the nature of this investment (i.e. investing in the
stock market) it is recommended that you invest for at least 3-5 years.
Start saving sooner rather than later
The sooner you start, the more time you have to take advantage of compound
growth. Compound growth is growth on top of growth. An investment of N$100 at
the start of year one could grow to N$110 by the end of it. The growth in year
two will then be on N$110 and so on.
The more time you have to invest the more aggressively you can structure your
investment portfolio. If, for example, your daughter is six months old and you
would like to one day send her to university you will have almost 18 years to
invest. You can afford to take on higher risk, which brings with it the
potential for higher returns.
If your son is 13 and you have just 5 years to save then your investment
portfolio would look quite different. The less time you have the more
conservative your investment choice.
Working out how much you need and how long you have to save for it is the easy
part. The next section looks at the solutions Old Mutual has to offer. Should
you need assistance when making the right choice for you and your family, an Old Mutual Personal Financial Adviser can provide some sound advice.
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