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How Tax-Free Savings Could Fund Your Child’s Education

Sending your child to university is pricey which is why parents need to start saving as early as possible for their child’s future.

Investec Specialist Bank and Asset Management

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Five South African universities have been included in the Times Higher Education BRICS & Emerging Economies Rankings 2015 – a list of the top 100 universities in countries classified as emerging economies.

The ranking reportedly looks at all core missions of a world-class university, using carefully calibrated performance indicators.

The University of Cape Town (UCT) ranked 4th in the list, with the Universities of the Witwatersrand and Stellenbosch at number 14 and 17 respectively.

Much further down in the assessment, the University of KwaZulu-Natal came in at 47 and the University of Pretoria ranked 77th. Accolades such as this bolster an institution’s reputation, but in terms of student registration, the biggest barrier to entry for many prospective students, is the cost.

Related: Three Funds You Can Tap into Right Now

The exorbitant cost of attending university in South Africa means that for many parents planning the options for their child’s tertiary education, this route is simply not a financially viable one.

Many universities have levied annual fee increases well above inflation year-on-year – a point noted by Higher Education and Training Minister Blade Nzimande earlier in the year. Declining government funding has been blamed for this, but the end result is a university degree that’s simply too expensive for household budget’s already under pressure.

No time like the present

If parents start saving early enough for their child’s tertiary education, enrolment at a South African university suddenly becomes a possibility.

According to René Grobler, Head of Investec Cash Investments, the sooner parents begin contributing to an investment plan, the sooner their money can begin working for them and thanks to National Treasury’s new tax-free savings initiative launched on 1 March, that time is now.

“Treasury’s confirmation that parents can open a tax-free savings account for each of their children provides the optimal mechanism to begin saving literally from as soon as your child has an ID number,” says Grobler.

Introduced in a bid to turn the tide on non-savings, the tax-free savings initiative aims to stimulate saving over and above retirement-based savings. This provides an excellent opportunity for parents to take advantage of this compelling opportunity to save for their child’s education.

Make education your goal-based saving

As an example, if a parent started contributing R30 000 per year into a tax-free savings account with a 7% fixed interest rate, before their child turns 17, they would have met the current lifetime contribution limit of R500 000.

If they left this in the tax-free savings account until their child turns 18, thanks to compound interest (at a constant rate of 7% per annum) their accumulated savings would have grown to R1,04 Million. A valuable investment in anyone’s language.

Minister Blade Nzimande agreed to a meeting with vice-chancellors to discuss various issues, including what is responsible for driving high costs at universities. But currently, typical first year tuition fees for a student studying a straight BCom at UCT range from R50 000 to R62 500.

According to Grobler, parents using a tax-free savings account to save for their child’s future should regard the investment as a long-term one.

“For clients who exercise the restraint required to leave their investment for the full term, thanks to the positive effects of compounding interest, they will reap the most benefit,” she says.

Related: Taking South African Financial Skills to the World

While Treasury has stipulated that the tax-free savings account offers full liquidity within 32 business days in the case of an emergency (with a minor product-specific penalty fee applying) without any prescriptive terms and conditions on its usage, clients should note that the account cannot be reimbursed with the withdrawn amount at a later stage.

Withdrawals will therefore negatively affect the tax-free growth of the investment over time. Also, it’s important not to exceed the annual or lifetime maximum contributions, since any amount over these thresholds will be taxed at 40%.

Investec Cash Investments falls under Specialist Banking and offers cash solutions to individuals, small businesses and financial intermediaries. Clients can choose from a range of cash products with guaranteed capital and highly competitive annual returns, ranging up to 9.2%*. These savings and cash investment products offer capital preservation, a high level of security and exceptional returns with various levels of accessibility. There are no fees attached.Investec provides a wide range of financial products in South Africa through its Specialist Banking, Asset management and Wealth and Investment divisions.

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4 Black-Owned Businesses Participating in This Enterprise Development Programme That Are Growing – Fast

The Department of Small Business Development (DSBD) and Property Point have joined forces to take 16 small to medium-sized, black-owned, businesses, through a life-changing enterprise development programme.

The Business Place

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The Department of Small Business Development (DSBD) and Property Point have joined forces to take 16 small to medium-sized, black-owned, businesses, through a life-changing enterprise development programme.

In its first three months of operation, this programme has already seen incredible results with an average growth rate of 27% per business,  R17,8million in contract secured and 21 direct jobs created. This is a unique collaboration in that it is set up specifically to encourage access to markets for the beneficiary businesses and is the first of its kind in the industry.

But who are the people behind the numbers?  Meet four out of the 16 business owners , Thabiso, Falvia, Malusi and Mandla taking full advantage of this opportunity.

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Calling All Social Entrepreneurs: Be SA’S Next Changemaker With The Nation Builder Social Innovation Challenge

In partnership with LaunchLab and the Mergon Group.

Mergon Group

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Nation Builder, together with the Stellenbosch University LaunchLab and the Mergon Group, is inviting business pitches for their inaugural Social Innovation Challenge. The competition aims to identify and support South Africa’s social entrepreneurs, with an opportunity to win a share of R150 000 seed capital.

Entrepreneurs with a self-sustainable business idea – no matter how simple or small – that addresses particular social issues, positively impacts communities, empowers the disadvantaged, or has the potential to solve local problems in innovative ways, are invited to enter the Social Innovation Challenge.

Ten finalists will receive exposure to a broader network of business investors at the final pitching event, which will be hosted by LaunchLab in Stellenbosch on 13 June 2018. Three final winners will receive their portion of R150 000 funding capital, as well as business support from LaunchLab.

Related: How To Be A Social Entrepreneur

In addition to social innovation specialists, media and social development experts, the judging panel will consist of astute business leaders who have successfully walked the entrepreneurship journey.

“Social entrepreneurs are those who see social challenges as opportunities, devise sustainable business solutions to meet those needs, and positively impact many South Africans in the process,” says Keri-Leigh Mac Donald, Executive Director of Nation Builder, an organisation that supports businesses in leading social change in South Africa.

“Social entrepreneurs are the next wave of change makers and social reformers. Nation Builder wants to support and showcase some of these great and emerging home-grown social businesses as a means to challenge us all to think differently when addressing our local social challenges,” she adds.

According to Brandon Paschal, Head of Incubation at LaunchLab, most of the start-ups that the LaunchLab currently work with already have a strong social conscience. “We have worked with many great small businesses in sectors such as mental health, financial inclusion, job creation, empowerment, and sustainability.  We’re excited for them to have this platform with Nation Builder and the broader network of great socially-responsible companies. It is a wonderful way for them to gain more exposure, but also to work with like-minded partners that can help take their businesses forward, without compromising on their social conscience and the greater purpose of their business.”

The winning entrepreneur and their business idea will also be showcased at Nation Builder’s In Good Company conference in Gauteng in August 2018. In addition, they will receive exposure through the various Nation Builder, Mergon and LaunchLab media channels.

“The societal benefits from these enterprises can bring about increased economic activity and opportunities for many more South Africans, while playing a pivotal role in breaking the cycles of social ills that many people are facing daily. The Nation Builder Social Innovation Challenge is a first step in fuelling and highlighting local social innovation solutions,” says Pieter Faure, CEO of Mergon.

Related: 3 Ways For Social Entrepreneurs To Access Fundraising

Submission requirements: Submit a 3-minute video (cell phone footage can be submitted too) of yourself explaining your business idea with your entry form which can be found on the LaunchLab website: http://www.launchlab.co.za/nationbuilder2018

Pitches (video entries) need to focus on providing the following information:

  1. Provide a brief summary of the business/social innovation idea and its history.
  2. What is the particular social issue that the business idea aims to address?
  3. How does the business idea solve or address the social issue?
  4. Explain how the business intends to make money and be sustainable, while clearly describing the target market or customer profile.
  5. What key milestones have been achieved within the venture already?
  6. What is the strategy to grow the business and scale the social impact?
  7. Anything else that the panel needs to know?

Submissions opened on 14 March, and the deadline for online submission entries is 11 May 2018. The top ten finalists will be notified by the end of May. Finalists’ transport to and accommodation in Stellenbosch for two nights will be provided.

LaunchLab’s terms and conditions apply, and are available to download here:  https://launchlab.co.za/innovationchallenges/competition-terms-conditions/

The three winning pitches will be announced at the pitching event on Wednesday 13 June 2018. The panellists’ decision is final.

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How Your Devices Can Improve Your Business Travel

Dawn Weir, head of kulula work and a veteran business traveller, offers these tech-savvy tips for road-warriors.

Kulula Work

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Technology has made business communication and business travel easier than ever, but it’s still possible to have a minor disaster involving your indispensable devices. Dawn Weir, head of kulula work and a veteran business traveller, offers these tech-savvy tips for road-warriors.

Stay on track

Activity trackers can help you stick to your fitness regime by recording step-counts, distances covered, sleep and nutrition. If you don’t fancy wearing one that looks like it’s from the flight-deck of the starship USS Enterprise, others are available which clip onto your ankle or clothing. Many are water-resistant and rugged, but if you prefer to not buy-one, apps like Samsung Health will record and analyse your daily activity.

Related: Kulula Work Brings You The Cheapest Flights Of The Day For Your Business Travel

Power naps

A few bad nights’ sleep while travelling can leave one feeling unfocused and tetchy. Some of us sleep better in hotel-rooms than others, and some can be downright noisy. You can try using earbuds, but we don’t all like having wads of foam stuck into our skulls when trying to slip into the arms of Morpheus. One alternative is to load a white-noise generator on one of your devices. A site like www.mynoise.net has hundreds of soothing sounds, including waves, rain, crackling fireplaces, trickling streams and even Tibetan monasteries.

It might not drown out the sound of the guys returning to the hotel from their “team-building dinner” at 2am, but it’ll help to smooth out the noise of traffic and air-conditioning.

Cancel the chatter and clatter

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Many business-travellers now swear by noise-cancelling headphones, which block out distractions and racket and can subtly let fellow travelers know that you’d prefer to not engage in lively conversation. Researchers disagree on the effectiveness of binaural beats for everything from creativity to concentration, but many students, academics and entrepreneurs find that they help with focus the mind.

Stay juiced

Most mobile devices have decent battery-life nowadays, but the size and brightness of their screens and the plethora of apps running on them can drain that very quickly. Save your battery by switching off anything you don’t need: BlueTooth, location, mobile data and so on, as well as apps you’re not using. Switching your phone to Flight mode will also save battery power. Travellers increasingly user power-banks to boost battery-life, but Weir suggests reading users’ product reviews before buying one, as some are far more efficient than others.

Related: Flying High With Reliable Travel Partners CANCOM And Kulula

Back up and go

Save your important documents – scans of your passport if you’re travelling internationally – as well as hotel reservations and travel itineraries, and take pictures and screenshots of them on your phone. That all-important PowerPoint presentation? Use a file-hosting service like Dropbox to put it in the cloud so you can access it wherever you need to.

Declutter

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If you’re a regular business traveller make a point of emptying all your luggage every few weeks. You’ll probably find you’ve accumulated flash-drives, USB adaptors and stationery and other stuff that takes up space and adds weight.

Downsize

Everyone from business travelers to backpackers loves the portability of laptops, but while they’re lighter than ever, those with bigger screens can be bulky. One option is to travel with a tablet, which offers the efficiency of a laptop while taking up less space. If you need to do a lot of inputting while you’re on the road, get a flexible keyboard that can be rolled up until need, or pair your tablet or smartphone with a laser projection keyboard. It’s a clever gizmo that projects a full-sized QWERTY keyboard onto any flat surface, allowing you to type pretty much anywhere.

Related: How To Take The Hassle Out Of Business Travel With Kulula Work

Converge

We’ve all seen the infographics showing how smartphones combine all the devices we once owned separately, like cameras, DVD- and CD-players, and that innovation continues. The Belkin Travel Rockstar combines a battery pack, surge protector and charger. It has three plug-ports (you may need an adaptor, depending on which plug configuration you use) and two USB ports.

Still not high-tech enough? Try Pluggage, a smart suitcase produced by luggage brand www.delsey.com that has its own app. It’s available in three sizes and its features include fingerprint ID to lock and unlock it (you can also lock and unlock it using the app), interior lighting and speakers. It weighs itself, has integrated USB chargers for your devices, and GPS tracking notifies you when it’s on a luggage carousel at the airport or being loaded onto or off a flight.

To make your business travel that much easier and to find out more about kulula work call +27 (0)11 285 3050, email sales@kulula.com or visit www.kulula.com/work.

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