Put Stocks, Rather Than Socks, Under the Tree This Christmas
These days, we are all under more financial pressure than usual. Inflation and a weaker rand are taking their toll (The weaker rand is always going to benefit certain sectors). So, if you are lucky enough to be getting a 13th cheque this year or your business has allowed you to draw profits, use your 13th cheque to make a difference into the future
Gifting an investment
If you are considering giving an investment as a gift, you can either make a once-off contribution, or commit to making a regular contribution every year. Consider that if you invested just R1 000 a year for 20 years, and achieved an average return of 10%, a child born today would have an investment account of R67 000 on their 21st birthday.
Having the opportunity to watch the investment grow together and learning from how it performs could also be a gift. The discussions around the investment could even end up being more valuable than the monetary value.
Tax-free savings accounts are a fantastic vehicle for this and can be set up in a child’s name with consent from their parents.
Make it festive
If you are going to give an investment as a gift, it’s worth talking about it beforehand. No one really wants to get a blank application form under the tree if they don’t understand what it’s for.
Even young children will appreciate being told that you are investing for them. It’s also a great way for them to learn about the importance of long-term savings.
For older children or family members, talk about what the investment could be for, and give it a name. This is important for them to think about the future outcome – for instance: ‘overseas university experience’ or ‘second honeymoon’.
Wrap the first statement in a festive way and add a personal message. This is still Christmas, after all.
Give it away
Donating to charity can also be a very fulfilling way to use some of your bonus. There are many outstanding organisations doing incredible work in South Africa. They deserve all the support they can get, particularly in more difficult times.
You can also make this a family decision, by asking everyone to come up with a charity idea and make an occasion for holding a vote. This gives you the opportunity to make it festive.
Remember that donating to a registered charity in South Africa is also tax deductible. If you seek the deduction, request a tax certificate to include with your next tax return. Keep in mind there are donation limits, and these are best discussed with your tax practitioner.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.
© FinDotNews