As an investor, you need to know the following before you invest e.g. your investment purpose and your specific short-, medium- and long-term goal with your investment. For example, do you want to save for a specific short-term need such as a new vehicle or home improvements, do you want to invest with a longer-term goal in mind such as university fees or will your investment be for post-retirement provision? An Investment company will provide the investment platform e.g. Allan Gray, Discovery Invest, Noble, Momentum Wealth etc. to invest your money in a variety of investment funds (according to your investment risk profile) in specific products that will cater for your specific investment need. Investors will need advice on their choice of the correct investment platform-, funds, and product that will suit their investment goals best over the correct period. These products may include the following:
- Savings for your short-, medium- and long-term goals: Endowment plan / Flexible investment plan / Guaranteed return plans / Tax-free savings plan
- Savings for pre- and post-retirement: Retirement Annuities / Preserver plan / Retirement Income plan
Endowment: Is in effect a savings plan that provides investors with full access to their funds after a specific period (normally 5 years plus) or to the beneficiary when the investor dies. After the 5 year period, you have access to your funds whenever you need to. This product is structured to the investor with a long-term commitment. Endowments are taxed at reduced rates and withdrawals after the first 5 years will not be taxed. The investment can be made with a recurring premium or with a single lump sum payment over a specific period (minimum 5 years). Your investment will be affected by market movements over the investment period.
Flexible Investment Plans: Allow you to save for short-, medium- and long-term goals, while providing you immediate access to your funds for those unexpected events with no cost involved to the investor. The investment can be made monthly or with a single lump sum payment.
Guaranteed return plans: When you choose a Guaranteed Growth Plan, your lump sum investment will grow at a guaranteed growth rate for five years and you will know at the start of your investment exactly how much your capital will grow. In the case of a Guaranteed Income Plan, your investment will provide flexibility to grow a portion of your lump sum at a guaranteed rate (growth portion) and you will receive a regular income from the other portion (income portion) of your investment at the same time. You will have flexibility with payment intervals and income growth options on the income portion of the investment. Market movements over the five years will not affect your investment on both guaranteed plans, however, your investment return will be lower than in the case of an Endowment, Flexible Investment, and Tax-Free savings plan.
Tax-free Investment: In line with the South African Government’s initiative to incentivize and promote savings, investors can invest tax-free in this savings tool. Therefore, the investor will not pay any tax on dividends, tax on income, Capital gains tax, Performance fees, Initial fees and service fees except for broker fees. The maximum annual amount to invest is R 30 000 per annum or R2500 per month per investor with certain minimum premiums depending on the insurer. An investor may only invest a maximum of R500 000 in this savings plan for life (numbers may be adjusted for inflation). You may withdrawals money at any time (tax-free), however, amounts that are returned to the account will be subject to the annual limits and all withdrawals from the account will affect the lifetime limit of R500 000. Any amounts exceeding the R30 000 p.a. the limit will be taxed at a rate of 40%. In this case, we advise that you will invest extra funds in another investment product.
Retirement Annuity (RA): Planning now for retirement is an important step towards future financial security. To be able to sustain yourself in retirement without relying on others for support is an immense challenge that most individuals haven’t properly planned for. A retirement Annuity is a useful investment tool if you are serious about your future and about maintaining financial independence. It is a good, safe form of investment because nobody will ordinarily have access to the funds before the selected maturity date, even in the event of insolvency. A Retirement Annuity is relatively safe. The maturity date may be set anywhere between the ages of 55 and 70. Contributions are tax-deductible up to certain levels and growth and income earned on your investment is tax-free.
We offer products and investment funds from the following insurers to you e.g. Allan Gray, Noble Private Portfolios (Pty), Stanlib, Discovery Invest, Liberty and Momentum Wealth