1. Should I invest for my child or my own retirement first?
Your own retirement, in almost every case. Your child can get a bursary, a student loan or a part-time job to pay for studying, but nobody lends you money to retire - and a parent with too little saved often becomes a financial burden on the same child decades later.
A reasonable order: expensive debt cleared, an emergency fund in place, your own retirement contributions on track, and then investing for your children. If you are not sure whether your retirement is on track, our step-by-step guide to how much you need to retire will tell you.
2. What are the main ways to invest for a child?
There are five common options, and the first two cover most families:
| Option | Tax | Who controls it | Main catch |
|---|---|---|---|
| TFSA in your child's name | None on growth or withdrawals | You, until 18; then your child | Uses up your child's own R500 000 lifetime allowance |
| Investment in your own name, earmarked for your child | Taxed as yours (TFSA, or ordinary account) | You, always | Uses your own allowances; nothing stops you spending it |
| Unit trust or ETF account in your child's name | Taxable; may be taxed in your hands (see question 8) | You, until 18; then your child | Less tax-efficient than a TFSA |
| Education policy or endowment | Taxed inside the policy at 30% | The policyholder | Restriction period, and fees that are often higher |
| Bank savings account | Interest taxable above the exemption | Depends on the account | Too little growth for a goal more than five years away |
Before choosing a product sold specifically "for education", compare its total investment charge with a plain low-cost fund. The label does not change how the money grows - costs do.
3. Can my child have a tax-free savings account?
Yes. There is no minimum age for a TFSA in South Africa. A parent or legal guardian opens and manages it on the child's behalf, usually with the child's birth certificate or ID number and the parent's own documents. Many banks, fund managers and investment platforms offer them.
The account belongs to the child, and every rand paid in counts against the child's limits - not yours.
4. Should the TFSA be in my name or my child's?
It depends on whether you would rather use your own allowance now or preserve your child's for later. Both are reasonable, and the trade-off is worth understanding before you open anything.
| In your child's name | In your own name | |
|---|---|---|
| Whose R500 000 lifetime limit it uses | Your child's | Yours |
| Control at 18 | Passes to your child | Stays with you |
| Good if... | You have already filled your own TFSA, or you want the money to be clearly theirs | You have unused allowance and want to decide when and how it is used |
| Watch out for | Your child arriving at adulthood with part of their tax-free allowance already used | The money mixing with your own savings and being spent elsewhere |
The case for your child's name gets stronger the earlier you start: a TFSA opened at birth has up to 18 years of tax-free growth before your child even becomes an adult. The case against is that an investor who has already used the lifetime allowance by 18 has lost one of the most valuable tax breaks available to them as a working adult.
5. How much can I put into my child's TFSA?
Up to R46 000 a tax year from 1 March 2026, and R500 000 over their lifetime. Anything above either limit is taxed at 40% as a penalty. At the full R46 000 a year, a child would reach the lifetime limit in under 11 years.
Two rules catch parents out. Withdrawals do not restore the allowance - take out R5 000 and put it back, and you have used R10 000. And the limits apply to all TFSAs in the child's name combined, at every provider.
6. Do grandparents' gifts count towards the limit?
Yes. If a grandparent, aunt or godparent opens or pays into a TFSA in your child's name, it counts against the same R46 000 annual and R500 000 lifetime limits as your own contributions.
This is the most common way children end up over the limit: two parents and two sets of grandparents each contribute "a bit" to different accounts, and nobody adds it up. Agree one account, or one person who keeps track. A shared note in the family group works fine.
7. Is there donations tax when I invest for my child?
For most families, no. Money you put into an account in your child's name is a donation, but each person can donate up to R150 000 per tax year without donations tax - raised from R100 000 in Budget 2026. Each parent and each grandparent has their own exemption.
Investing in your own name and earmarking the money for your child is not a donation at all, because the money stays yours. Donations tax only becomes a practical concern for families moving large sums into a child's name.
8. How is my child's investment taxed?
Inside a TFSA, it is not taxed at all. Outside one, the answer depends on who gave the money. Income earned on money a parent gives to a minor child is generally taxed in the parent's hands, so that parents cannot lower their tax by moving investments into a child's name. Income from money given by grandparents or others is usually taxed as the child's own.
A child is a taxpayer like anyone else, with the same tax threshold and the same annual exemptions for interest and capital gains - so small amounts often attract no tax in practice. Our guide to how investment tax works in South Africa explains the exemptions.
9. What should the money be invested in?
Match the investment to how long until the money is needed, not to the child's age. A newborn's university fund has 17 or 18 years to grow, which is long enough to hold mostly shares.
| Time until the money is needed | A typical approach |
|---|---|
| 10 years or more | Mostly shares, through a broad, low-cost ETF or index fund - local and global |
| 5 to 10 years | A balanced mix of shares and bonds |
| 2 to 5 years | Start moving each year's needs into lower-risk options |
| Under 2 years | Cash-like options - money market, fixed deposits or RSA Retail Savings Bonds |
The gradual shift matters. A 30% market fall in the year before first-year fees are due is the scenario to plan around. Our guide to how a portfolio should change over time explains the logic, and building a diversified portfolio covers the mix.
10. How much could I have saved by university?
More than most parents expect, if they start early. Here is what regular monthly saving from birth could grow to by age 18, assuming 10% a year before inflation:
Before costs and inflation. Over 18 years, inflation will reduce what that money buys, and university fees have historically risen faster than general inflation - so check current fee schedules and plan conservatively.
Both examples stay inside the TFSA annual and lifetime limits, so in a TFSA none of that growth would be taxed. The reason the numbers are so large is time - see compound interest explained. Start the same R500 a month when your child is ten, and it reaches only about R71 700 by 18 - a quarter as much.
Setting it up as a monthly debit order from the start is what makes it happen. See how to automate your investing.
11. What happens when my child turns 18?
At 18 your child becomes a legal adult, and any account in their name becomes theirs to control - including the right to withdraw everything, whatever you intended it for. You cannot attach conditions to an ordinary investment in their name.
If that worries you, keep the investment in your own name and give it to them when you choose, or speak to a professional about a trust - which brings costs and its own tax rules. Either way, the best protection is a child who understands money. Teaching them what the account is, how it grew and why it exists does more than any legal structure. Our learning hub and investing glossary are a good place for teenagers to start.
The short version
- Your own retirement first, then your children.
- A TFSA is usually the most tax-efficient home - decide deliberately whether it is in your name or theirs.
- Track every contribution from every relative against the R46 000 and R500 000 limits.
- Invest by time horizon, and move to safer options in the years before the money is needed.
- Start early and automate it. Time does most of the work.
Keep the whole family's investments in view
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Launch EZvest - it's free to start ->Educational content only. This article is general information, not financial advice, and no platform, product or provider is endorsed or recommended. Tax figures are for the 2026/27 South African tax year and are set by SARS and National Treasury, which change them regularly - confirm current figures before relying on them. Nothing here is a recommendation to buy or sell any security. Consult a licensed financial professional before making decisions. How we research and review these guides.