2022 has witnessed the worst stock market and bond market performances globally in the last 40 years. While we advise clients to be patient and not withdraw or change their investment portfolios (at the wrong time), as we expect the market to recover in the next 12 to 18 months, we also understand you as investors are looking for alternative investment options that provide high, secure returns. In this article we highlight 3 options.
1. Fedgroup Secured Investment Fedgroup Secured Investment (Participation Bond) has been around for over 30 years. It is a five-year investment, giving investors a fixed interest rate return over the five-year period. Currently it has a special offer, giving investors 12.6% p.a. compounded return over 5 years. If an investor invests R1,000,000. he would get R1,611,335 (capital and interest) back at the end of five years, after our advisor fees. The interest income may be subject to tax, based on your tax position. If your marginal tax rate is 35%, then your after-tax return is 8.19%. If your marginal tax rate is 45%, then your after-tax return is 6.93%. 2. Guaranteed growth investment This type of investment is offered by life insurance companies using an endowment product structure. You make a lump sum investment, at the end of five years you get the maturity value back, tax free. Life insurance companies use their tax planning to offer this investment product. For a R1,000,000 investment, currently the life insurance companies offer the following after-tax yields: Discovery - R1,398,439, 6.94% Liberty - R1,380,442, 6.66% Momentum - R1,403,175, 7.01% Old Mutual Wealth - R1,402,337, 6.90% These yields are subject to change weekly. Please contact us to obtain the latest best rates. Guaranteed growth investment is especially attractive to high-income, conservative investors looking for guaranteed returns after tax. 3. RSA Retail Savings Bonds RSA Retail Savings Bonds is offered by the South Africa National Treasury, you lend money to the government and receive interest every 6 months. It offers 2, 3 and 5-year fixed rates as follows: 2 Year Fixed Rate 9.50% 3 Year Fixed Rate 9.75% 5 Year Fixed Rate 11.50% Minimum investment is R1,000. You can invest up to R5,000,000 in RSA Retail Savings Bonds. Persons over the age of 60 can receive their interest payments monthly. For more information on RSA Retail Savings Bonds, visit official website https://www.rsaretailbonds.gov.za/home.aspx. If you would like to speak to an advisor about investment options, email service@daberistic.com with your details.
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Over the last two years, we have witnessed the COVID-19 pandemic ravaging around the world, causing countless deaths and immeasurable suffering. Thanks to the rapid development and deployment of COVID vaccines, the situation is starting to be brought under control.
Locally, life insurance companies have experienced many COVID related death claims, increasing their claim costs by billions of Rands. As a result, they reviewed life insurance premium rates and informed brokers that, if a life insurance applicant is not vaccinated against COVID or cannot provide proof of COVID vaccinations, they would load the life insurance premium by up the 50%. Recently, as the COVID infection wave starts to stablise and more people are vaccinated, life insurance companies reviewed their underwriting requirements and relax the conditions accordingly. Liberty says the for life insurance applicants not vaccinated, they will not increase their life insurance premium unless the applicant is over the age of 60. Old Mutual says they will not load the life insurance premium for applicants below the age of 50. Discovery Life also confirms they will not load the life insurance premium. In addition, they provide an incentive: If the life insurance applicant can provide proof of vaccination within the first year of life insurance policy, they will refund up to 100% of the first year policy premiums, based on the client's medical and Vitality status. The move by life assurers to proactively review their underwriting conditions is welcomed, especially in the current inflationary economic environment. Written by: Kevin Yeh, CFP® |
AuthorKevin Yeh Archives
January 2025
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