Endowment Plan

This is a tax-efficient medium- to long-term investment that pays out a lump sum after a specific period.

An endowment is a type of savings plan. It provides investors with full access to their money after a specific period (in this case five years) or when the policyholder dies. In South Africa, endowment plans are taxed at reduced rates (compared to the typical tax rate of an individual in the highest income tax bracket).

It is important to remember that an endowment is a long-term commitment. To get the full benefit of this type of investment, you must remain invested for at least five years. After five years, you will be able to withdraw your money whenever you need to. When you do decide to withdraw your money, you won’t have to pay any further tax on your investment.

What are the benefits of investing in an endowment?

Tax efficiency

Growth within endowment plans is taxed at reduced tax rates for individuals in the highest income tax bracket.

Investment choice

You have access to a range of unit trusts designed to enable you to select one or more underlying unit trust funds to suit your risk profile.

Discipline and flexibility

You can cash in your endowment investment without penalties after five years. You have flexibility in that you may switch between the unit trusts at any time. If you withdraw partially or fully before 5 years, or reduce or stop contributions, there may be some penalties,

Transparent fees and regular reporting

All fees are fully disclosed and we will keep you regularly informed on all aspects of your investment. You may also access your investment information online.

Transfer of wealth

You may nominate a beneficiary on your endowment. In the event of your death, the money in your endowment account is paid out to your beneficiary, and you do not pay executor’s fees.

Who should consider investing in an endowment?

You may wish to consider investing if:

• you wish to invest for at least 5 years
  
• you wish to invest for your child's education fund
  
• your marginal personal income tax rate is higher than 30%
  
• you wish to receive the investment payout tax free

What are the minimum investments?

The minimum investment is R1,000 per month. You may also stop contributing at any time without penalty. Escalation rate of 0%, CPI, 10%, 15% or 20% per year.

The minimum once-off lump sum investment is R50,000.

When can you withdraw your money?

You may make one withdrawal from your endowment plan in the first five years, the size of which is limited to your contributions
accumulated at 5% per year. After five years you can withdraw your investment as needed.

What are our fees?

For lump sum and recurring investments, our initial advice fee is up to 1.5% plus VAT.

Our annual advice fee is 0.8% plus VAT, deducted monthly from your endowment account.

For clients with investment portfolio greater than R3 million, our fees are negotiable on a sliding scale. 

Our product providers

Allan Gray, Discovery, Glacier, itransact, Liberty, Momentum, Old Mutual, Sanlam, Stanlib

Our Preferred providers

Discovery Invest

We select Discovery Invest as our preferred provider for the following reasons:

1. Reputable financial services group;
2. Financially sound;
3. Easily creates detailed investment proposal;
4. A wide range of internal and external funds;
5. Clever use of technology to provide excellent client service;
6. Costs are competitive;
7. Costs are reduced by at least 40% if clients have a Discovery Life policy and Discovery funds are selected (recurring investment);
8. Upfront boost of between 7.5% and 26% to lump sum investments depending on whether Discovery Funds or External Fund and whether client has a Discovery Life Plan or not;
9. LifeBooster boosts investment value by 5% to 15% depending on Vitality status if life assured dies before maturity;
10. Fee Payback benefit enhances investment value. Please be aware that withdrawals


More info: Discovery Endowment Plan Brochure