Educating a child from Pre-school to University can be a daunting for new parents, particularly if private schooling is your desire but is essential in a Country where the cost of Education is far outstripping inflation. I am referring to the top South African Private schools that are not boarding schools and include the likes of St Davids Inanda, St mary’s, Rhodean, St Stithians and the like. Schools like Michaelhouse, St Andrews Grahamstown and Hilton are a lot more expensive.
The average current private school fees are R80 000 per year excluding any extras like sports equipment, books, school tours and a plethora of other expenses bringing the current total annual expense to between R100 000 and R110 000.
Escalate that at an average of 9%/annum, which as a parent who is educating 4 children in Private Schools and Tertiary Education, and your final school year assuming they complete 12 years of schooling will be over R280 000 for that single year. This clearly illustrates the need to invest for your child’s education from the very moment they are born.
University Education is currently not as expensive as Private schooling but when you add the extra costs like transport, residence costs and books you are close to the ballpark figure of an average Private High school.
Unit Trusts are an ideal way to start your investment plan and to accumulate a significant amount of capital which will then allow you to participate in large collective investment schemes which are likely to offer better returns. The secret to investing for the longer term education needs is never to touch the investment and to re-invest all of the interest. Compound interest has a tremendously powerful impact in the longer term.
If you are thinking of having a child or have a child, consult an investment adviser straight away and start planning for your child’s education. Take it from me, educating a child nowadays is a challenge for almost anyone!