Can you help your kids get onto the housing ladder now or down the line… without leaving you penniless? w&h money expert Angelique Ruzicka explores the options
With so many adult children still living at home in their thirties or paying high rents, which leave little scope for saving for the kind of hefty deposit required to buy, it’s no wonder the bank of mom and dad is increasingly seen as the only way to help them buy a home of their own. And for new parents, thinking of their children’s future buying power, this scenario isn’t likely to change. So how do you get them on the property ladder without leaving yourself low on savings or retirement funds?
1 New parents can get ahead of the curve
Any South African with a valid ID can save tax-free through a Tax Free Savings Account (TFSA). Parents can also open this type of account for minors who have an SA ID number. You can contribute a maximum of R33 000 per tax year into such an account, and there’s a lifetime contribution limit capped at R500 000.
Investing in a TFSA when your child is still young will allow you to reap the benefits of compounding, where investments are boosted thanks to interest gained over time, says Daryll Welsh, head of product development at Investec Investment Management Services. “Imagine if your child could start their working career with an accumulated lump-sum saving? It would take away the pressure to put away more than they may be able to save out in the real world,” he adds.
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