I'd like to open a share investment as well as a tax free investment account in the name of a child. Do you think OST is a good platform to do so? I see there is a TFS Would I need to register a new account from scratch or can I link it to my existing account? Any suggestions on good alternatives where I can manage my child's investments in one place? I'm assuming I should go for long term (20+ year), minimal cost, passive managed or index tracked sort of investments that I can mostly forget and let grow.
Yeah, subscribed, with a particular interest in cost comparisons. Cost & info/education seems to be a barrier to entry from my point of view. The prevalent thought seems to be to charge more for less in za inc.
out of curiosity, why the tax free route. Can you still benefit from the tax deduction if you are putting it into your child's name? It isn't like your child needs the tax break, so if you don't benefit (not an expert here), then just go the conventional route - and go straight to source - Satrix or other. Also, they need to be older than 7 to be able to put it into their name (or at least this is how it was when I set up a fund for my niece and nephew).
There isn't a tax 'deduction' per se. As far as I understand, it counts separately towards the child's 30k pa limit, so I can drop 30k in there every year until he's 16 (500k lifetime limit). Tax free investments won't incur capital gains tax at disposal, so whenever that time comes (hopefully 30-40 years down the road) that's when he'd benefit. No div tax over the life of the investment so that's also lot of compounded growth. Never too early to start a retirement fund.
Of course there are other ways to avoid CGT, e.g. disposing of the asset slowly over several years to take advantage of the annual exemption, but who has that kind of time when you unexpectedly need a lump sum of money.
I'm considering the EasyEquities.co.za route for some direct share investments (e.g. R500 from granny who wants him to invest in BAT). No monthly fees, no minimum brokerage. They also provide a tax free account.