Investing for your children today is a wonderful gift for their future. As a parent you know all too well how much your young one can cost you, even for the ‘small’ things. Together with the nappies, pocket money and textbooks, the bigger picture is looming - the long term costs, such as paying for varsity, furniture for their studio or buying them their first car.

Michelle Dubois, Legal Marketing Specialist at Liberty Retail says: “Ultimately, you want your children to get the very best start in life and a fruitful ending. If you start planning ahead now for big future expenses, like the cost of education, this can help to ease the financial pressures later on.
Your children's education is perhaps the largest and most important expense you have to plan for, so you need to explore your savings and investment options carefully,” she says.

There are many options one can look at when investing for their children’s education and choosing the right one can be complimented with advice from your financial advisor.

Dubois provides a list of options one could look at:

Education savings account through a bank

Although this is a safe savings option compared to ‘hiding it under the mattress’ - Bank savings earn very low interest and the money is easily accessible to you.

Education policy 

You can save as little as R200 a month through an education policy. This investment is put in the stock market, where it earns relatively good interest. This should be invested as a medium to long term investment anywhere from 3 - 15 years.

Unit trusts 

A unit trust (or fund) is an investment product that enables you to invest in an asset class such as equities or bonds.  Instead of buying and owning shares or bonds yourself, you buy units in a portfolio of shares.  A unit trust allows a group of investors to pool their capital to invest in financial markets.  Unit trusts now create an opportunity for anybody to invest on the stock market or capital market. Depending on the company and type of unit trust you choose, you can invest smaller and larger amounts on a monthly or annual basis.

Endowments

An endowment is a long-term savings product that allows you to put away money monthly or annually.  This product can only be accessed twice in the first five years (once should you need to make a withdrawal and once for a part-surrender) and is ideally the type of investment that you would leave invested for the term of the policy.  Endowments are very good products to use if you have a specific financial goal and need to save a set amount every month.

What does it mean to invest in money markets?

Well, when you invest in money markets, you are investing in money itself.  A money market unit trust is a collective investment scheme.  The fund manager will collect your savings together with other members of the unit trust, and invest the money into a spread of different products with different terms to maturity and interest rates, in order to get you the best return on your money.

Then, what is a money market bank account?

Money market bank accounts include fixed deposit accounts and call and notice accounts.  These products vary from bank to bank.  The risk in this product is low and your investment will be as safe as the bank it is invested in.

“Don’t wait for the last minute to start preparing as that might be too late for yourself and your children. Investing in your children’s future should be a priority just as every need in your household. Speak to an accredited financial advisor, do some research – start somewhere,” concludes Liberty’s Dubois.