Questions to ask when you save for education


Two of Momentum’s Financial Advisors, Eric Windell and Thamsanqa Khumalo, identified some questions that you should ask your financial advisor when you want to save for education.

Given the fact that an education plan is still a pure investment that invests in the market and is affected by the same market instabilities as other investments, you should ask risk profile aligned type of questions.

Questions to ask your financial advisor when you want to save for education:

  1. What can I afford to save?
  2. Will that be enough? If not, how can I supplement this?
  3. How much will I have available to use at the end?
  4. Should I keep the term of the investment fixed or open-ended and what are the advantages and disadvantages of the two options?
  5. Will there be an annual premium escalation and if so will it be based on inflation or will it be fixed at a certain percentage?
  6. Are there any guarantees to the returns and capital?
  7. If not what’s the risk and how can we minimise the possible risks?
  8. What happens with the money if I die before the savings term is over?
  9. Isn’t it better to save money with the bank in fixed deposits or a savings account than to place it in an education investment?
  10. What annual percentage increase should I add to my initial contribution to counter the effect of inflation eating away my savings?
  11. Will the unpredictability of the JSE and the Rand exchange rate affect my investment?

You might also want to read about education costs, savings and study loans