Investing for education in an inflationary environment

Parents can expect little relief in 2024, with reports suggesting that fee hikes for South African schools will yet again come in above general inflation, which is currently sitting at 5.5% (based on the November 2023 print). Parents with kids at government and private schools alike should brace themselves for fee increases of between 6% and 10%, according to various reports. This is not unusual, with an economic bulletin published by the South African Reserve Bank (SARB) noting that school fee increases in South Africa have, on average, been roughly 2.6% above inflation every year since 2012, aside from 2021. In an environment of already high consumer inflation, this packs an extra punch.

Many of us rely purely on our salaries to pay for our children’s education. We absorb the cost from month to month, tweaking our budgets to accommodate the ever-increasing expense. But the problem with this is that the cost of education typically grows at a higher rate than the average salary and inflation in general. Over time, this difference effectively means that a greater portion of your salary will have to be set aside for your children’s education.

For families who are concerned about the quality of education in the country, many are actively investing offshore to eventually access premium international education opportunities, according to news reports quoting stats from various local investment managers who offer offshore portfolios.

Read full article: https://www.allangray.co.za/latest-insights/personal-investing/investing-for-education-in-an-inflationary-environment/

January 19 2024 By Shaheed Mohamed