If you, or someone you want to help, earn below a certain threshold, the Fundisa fund may give your education savings a welcome boost. Fundisa is an education-savings initiative by the government, the National Student Financial Aid Scheme and the Association for Savings & Investment South Africa (Asisa). It is designed to incentivise South Africans to save for the tertiary education of learners from lower-income families.
The fund applies a means test of an annual household income of R180 000 or less to the families of beneficiaries, ensuring that Fundisa supports only the needs of children from lower-income families. The test is applied to the families of beneficiaries, not investors in the fund, which means that higher-income earners can invest on behalf of children from lower-income families.
A minimum initial investment of R40 is required, and investors can contribute R40 or more every month or top up the investment when money becomes available.
To reward investors for saving, an annual bonus of 25 percent (of contributions) up to R600, is paid per beneficiary. Bonus contributions, which are funded by the government and Asisa members, are not guaranteed. However, the fund has paid them since inception. Last year, the fund paid more than R5.5 million in bonuses.
The fund is a low-risk interest-bearing unit trust fund of funds, which has delivered an average annual return of 7.68 percent over the past seven years (after costs).
An annual fee of no more than 1.25 percent (excluding VAT) applies, which is taken from the return on the money invested. Unit trust companies that offer the Fundisa fund can discount this fee. A maximum initial fee of three percent (excluding VAT) may be charged, but only if the investment is made with the help of an independent financial adviser (and this can be negotiated).
Fundisa is available from Standard Bank, Nedgroup Investments and Absa.
According to a media release issued by Asisa this week, the fund saw a positive growth in assets under management, from R214.5 million in 2015 to R255.1 million at the end of December last year.
The number of investors saving on behalf of 27 213 beneficiaries increased to 22 382 in 2016.