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Listen: How to invest for your kids

Sep 4, 2020

Whether you are saving for your child’s education or investing for their future, it’s tough to know where and when to invest. When is a tax-free investment appropriate? Should you invest in your child’s name? And where should you save for those school fees? Maya (@mayaonmoney) and Mapalo (@womanandfinance) answer all these questions in this week’s podcast.


  1. Dear Maya

    Following my husband’s death, I have been allocated R10 mill from his approved retirement fund.
    I am 48 years young and have 2 kids, aged 10 and 6. I have not worked in 12 years but do intend re entering the job market as soon as possible. I do not have any assets in my name other than a paid up vehicle and Pres Prov Fund worth R300 000.

    I have been advised to take out a Flexible LA in my name using R6 million.

    My husband did not have any other life cover or assets (apart from the house) and he still owed R1,7 million on the bond, which I am now responsible for. The house is currently valued at R3 million.

    I have received conflicting advice on what to do with the remaining R4 mill from his death benefit.

    Either pay a large amount of tax in order to settle the bond, and then invest the balance into a unit trust, which allows flexibility for future cash withdrawals as well as a possible extra income.


    Utilise the entire R4 mill to buy Living annuities for my kids and only withdraw R7000 tax free income per child pm to help with initial survival expenses;
    then increase draw down rates when I have secure employment and the kids are older and reinvest this money in another savings vehicle. (I am hoping to ‘free’ / deplete this LA investment by the time they are at least 25 years by reinvesting some of the money elsewhere, which they will be able to utilise as needed. – the intention is to build up a small lump sum over a period of time.

    I would then still have to secure a bond in my name, (for R 1,2 million) and utilise the R500 000 tax free amount from the death benefit to decrease the bond from R1,7 to R1,2 million.

    If I follow this route, I am also concerned that I would be left without any immediate emergency fund to withdraw cash if needed. And, wondering if the interest on the bond over a period of 10 years would be worth the ‘tax savings’ I would receive if I utilised the R4 mill to purchase LAs in the name of my kids.

    I intend downsizing our home when the property value on our house has increased and I can sell it at a profit.

    Please could you shed some light on my dilemma? Any advice would be greatly appreciated!

    • Firstly I am sorry for your loss. It must be a very hard time and now trying to sort out the finances. Have you actually sat with a good financial planner – this person would be able to do all the relative calculations. It would be worth doing. I haven’t done the numbers but if it was me, I would probably pay some tax to pay off the mortgage – you keep a bond on the house so you still have access to some “cheap credit”. I would also want some emergency cash available. There is a lot to be said for the “sleep at night” factor.
      Your idea of placing some of the funds in an LA to pay for the kids is a good one. Another option is to see how much income you actually need and whether you could put some funds into a preservation fund for your retirement and draw more initially from the LA. But you really need someone to run the cashflow analysis properly.


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Maya Fisher-French author of Money Questions Answered

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