Page 33 - Waterfall City Issue 3 March 2023
P. 33
Opening an investment in a child’s name
will help educate them about retirement
planning, and there is no better way of
doing this than them watching their
own investment grow. When they are a
little older, you can encourage them to
contribute some of their pocket money
or birthday money into their investment.
In this way, you not only teach your child
about financial planning, you are also
giving them a head start.
Here is what the numbers say: If you
invest R500 per month, escalating at
6% per year for 18 years (and assuming
a growth rate of 10%), the balance will
be R427 819 after 18 years.
If you stop contributing when your
child turns 18 and leave those funds to
grow, when they reach the age of 55,
those funds should be equivalent to
R14 547 515.
However, if your child decides to
continue contributing to this RA when
they reach the age of 18 (assuming
a contribution amount of R1 500,
escalating at 6% per year, and a growth
rate of 10% per year), the value will
be around R26 581 386 when they
reach 55. In today’s terms, that is just
over R3 000 000. This is the benefit of
making use of the products available at
your disposal in the best way possible.
Having a savings strategy in place assists
in decision making. When it comes to
family and friends wanting to spoil the
children with presents for birthdays and
Christmas, why not suggest that a small
portion of what they were going to
spend be invested… the numbers will
tell the rest of the story!
One thing is for certain: you will never
regret that you planned for your
“Opening an investment in a child’s name will help retirement and that you have the
educate them about retirement planning, and there privilege of retiring comfortably, and
your children will be incredibly grateful.
is no better way of doing this than them watching Hopefully, they will do the same with
their own investment grow.” their children and, slowly but surely, we
will change our nation into one with a
better savings culture.
Waterfall City Issue 3 2023 31
