Have You Set Up an Investment or Savings for Your Children?

Mar 07, 2016
Author: Ean Barnard

Remember the piggy bank? Most of us had one when we were younger. Every so often we’d put a few cents into the slot on its back and we’d be very happy about it and the future it promised. When it finally reached a point where it couldn’t swallow 1 more cent, that would be the end of Mr Piggy as some of us would smash it to pieces to get the reward of months of an 'investment' or savings.  

A brief history of the piggy bank.

Believe it or not, the basic piggy bank used to be far more than just a childhood relic. The concept of stashing cash in hollowed objects has been around for centuries. Before the creation of modern banking institutions, people commonly stored their money at home, not under the mattress, but in common kitchen jars. During The Middle Ages, metal was expensive and seldom used for household wares. Instead, dishes and pots were made of an economical orange colored clay called pygg. Whenever folks could save an extra coin or two, they dropped it into one of their clay jars, a pygg pot. Over time, "pygg" evolved with the English alphabet, turning into "pigge" and finally into "pig." That explains why potters in the 19th century started making pig-shaped vessels when people asked for pygg banks. It might have been accidental, but the model's been with us ever since. When you see a piggy bank, no doubt you think of your youth and of saving money.

Why set up an investment or savings account for your children.

Saving for your child today is a wonderful gift for their future. Not only can they start their adult lives with some savings in hand, but getting kids involved early with saving also helps them learn important lessons about money. As a parent, you know it’s vital to teach your children the importance of personal finance and financial responsibility. What's the most important money rule you can instill in your kids? Many people out there, from parents to financial experts, would say the same thing: saving. Allocating a unit trust, investment or savings account for junior will give him/her a vital boost in life when it comes to college or other after-school endeavors. Setting up a savings or investment account for your child will not only give them a world of opportunity, but it’ll quickly teach them the benefits of earning interest.   

What are the different investment or savings options for your child?

Bank Accounts

You can go to any Bank in South Africa and ask for savings/investment options that are well suited for your child. This is probably the most common short-term option for parents wanting to save money for their child’s future as they often come with zero monthly management fees and no minimum balances. Just make sure of the cost structure, fees can rack up quickly and cut into the savings. You can compare different savings accounts here.

Unit Trusts

Unit trusts are also a favourite between people saving for their children’s education. You may want to consider savings policies which are fixed for a certain period of time (say five to 15 years). You can either pay fixed monthly premiums or make a lump sum payment into the policy. There’s limited access to the money and you can have your savings invested in a wide range of unit trusts of your choice. Feel free to compare Unit Trusts here.


The government-backed savings initiative, Fundisa, is also an option for households earning R180,000 or less a year. There is an annual fee of 1.25% (excl. VAT) that is taken from the income earned from the Fundisa Fund. If you take on the advice of a financial advisor to advise you on the Fundisa, they may charge you no more than 3% of your investment. The Fundisa fund is available through a number of financial institutions including Absa, Standard Bank, Old Mutual and FNB to name but a few.

It’s never too late to start saving, but the earlier the better. Start early, even if it’s just a small amount each month. This will put you on the right track to securing a great future for your children. Fincheck wishes all the best for you and your children!

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