Some ThuthukaSA customers open tax free investment accounts for their children. It’s important for all parents to understand that this is risky because when the kids turn 18, they are adults by law so the investment will be theirs and the parent will have no control over the investment. There are a few children who are now withdrawing the funds invested by their parents so I thought I should write this newsletter to give parents options. The last child just turned 18 years in January 2025 and the investment house sent him an email informing him of his investment. A little while later, he sent a withdrawal notice for R10 000. Although this is breach in POPI Act, the mom is a customer at ThuthukaSA and has been contributing the funds for him since 2016 – so we alerted her. He now has over R200 000 in the account so I hope the balance of the money is safe.

See below some of the key features of both a tax free investment and a retirement annuity:

With the above in mind, parents can look into the following options:

• Open a Tax free investment account and when the child turns 17, move the funds elsewhere where the child will not have access
• Open the investment account and move most of the funds out of the account when the child turns 17 and leave only a small amount so see how the child will behave with his own money
• They can open a retirement annuity
• They can open both a retirement annuity and a tax free investment account

We prefer the last option is the last one because this one ensures that your child is set up for life while still giving them limited access to money invested for him / her.

Contact ThuthukaSA, if you are ready to start investing for your children.