Saving is the last thing on most people's minds because of the increasing cost of living, inflation and interest rates.
But looking at the headlines and newspaper reports, the need for saving is being touted more than ever before.
We often do not recognise an opportunity. But we need only look at how well some of the BEE deals, including Sasol and Vodacom, have done.
Now there is an excellent education deal, Fundisa, so make sure you don't miss this one.
Fundisa is a savings account that rewards you for saving for a loved one's education. A bonus is allocated to the account each year, depending on how much was saved during the year.
The bonus can be as much as 25percent of the money saved in a year, but is limited to R600 a year for each pupil. This effectively means that R2400 can be saved in a year. A bigger amount than this can be saved but the bonus will be limited to R600.
A number of conditions are attached. Bonuses can only be used by pupils whose education you are saving for and if you access the funds, or the pupil decides not to study, the bonus amount is forfeited.
This fantastic concept is open to all South Africans who would like to help educate someone that they care about, provided that the pupil is a South African. The account holder does not have to be related to the pupil.
The money saved is invested in income unit trusts, which in turn invest in government bonds and bank deposits.
The interest, income and growth from the investment accumulates to the capital amount, as does the bonus amount. Yearly statements are sent to the sponsor giving a breakdown of the investment as well as the bonus paid for the savings year.
Once pupils are ready to study (has to be before they are 35), the unit trust company will send an award certificate to the sponsor. The pupil must take the certificate to the college or university and the institution will claim the money from Fundisa. Payment is made directly to the college or university.
Costs involved are an yearlyl fee of 1,25percent, which is taken from the income earned. The minimum investment is R40 a month.
The only other costs are a small commission if one uses the services of a financial adviser and maybe a debit-order fee at the bank where the account is held.
The Fundisa project is a government and unit trust company three-year pilot project. It is aimed at encouraging South Africans to save for the education of their loved ones.
lThe writer is director of Pioneer Financial Planning. Visit www.pioneer.co.za or e-mail email@example.com