An Endowment Plan is an investment plan which allows the investor to create wealth tax-efficiently. This plan benefits investors with a marginal tax rate greater than 30% and a minimum investment time horizon of 5 years.
WHO CAN INVEST?
GENERAL TAX BENEFITS
- Investors with tax rates greater than 30% will benefit from an investment within an Endowment Plan.
- Income tax of 30% and Capital Gains Tax (CGT) of 12% applies to individuals and trusts (with natural persons as beneficiaries) within the Endowment Plan.
- The individual interest and CGT exemptions are not utilized and remain intact.
BENEFITS AFTER END OF RESTRICTION PERIOD
- Regular withdrawals after the 5-year restriction period may have tax benefits to the investor/plan holder.
- If a person is making regular withdrawals from the Endowment Plan to supplement their annuity income, the annuity income can be reduced. A reduction in annuity income, which is subject to tax at the investor’s marginal rate, will result in a reduction of the investor’s income tax liability.
- Withdrawals from the Endowment Plan are treated as capital reductions and thus are not subject to income tax, but are subject to CGT.
BENEFITS ON DEATH
- No CGT, where plan is transferred to a nominated beneficiary.
- No executors’ fees where a beneficiary is nominated.
- Plan holder proceeds are transferable directly to the nominated beneficiaries, and therefore are not trapped as part of the frozen assets in the deceased’s estate.
- Estate duty may be applicable.
- During the first 12 months there are no restriction on the amount that can be contributed.
- From year 2, the maximum allowable contribution is 120% of the total contributions for the previous 2 years (where applicable), whichever is the higher.
- Withdrawals are restricted during the first 5-years (one interest free loan and one surrender); however, after 5-years regular withdrawals are allowed.
- Withdrawals during the 5-year restriction period are limited to premium/ contributions made plus 5% compound interest per annum.
The Endowment Plan may be ceded or pledged as security.
The Fairtree Worldwide Multi-Strategy Flexible Prescient Fund aims to provide maximum long term growth by investing in a diversified blend of worldwide assets and strategies. This is not constrained by Regualtion 28 and it is our best opinion on a balanced investment view. The objective is to provide competitive after inflation annualized returns measured in rand over a 5 year period.
The Fairtree Flexible Balanced Prescient Fund is a Regulation 28 fund. It combines a diversified blend of worldwide assets, at a low cost. The equity allocation uses systematic quantitative factor-based strategies, with a fundamental active overlay. The objective is to provide competitive after inflation annualized returns measured in rand over a 3 year period.
The Fairtree Invest Strategic Factor Prescient Fund is a Regulation 28 fund. Where our other two funds are 'all about the investment journey, this fund is more 'about the destination'. It combines a diversified blend of worldwide assets, at a low cost. The equity allocation maximized, still using systematic quantitative factor-based strategies, with a fundamental active overlay. The objective is to provide competitive after inflation annualized returns measured in rand over a 5-7 year period.
The Fairtree High Growth Portfolio aims to outperform the benchmark net of investment management fees, over any rolling 7 year period. The portfolio is diversified across the major asset classes utilizing a multi-manager approach, whereby fund managers are combined based on their skills and expertise.
The Fairtree High Net Worth Growth aims to provide an aggressive risk growth opportunity by blending a combination of both local and offshore equity. The portfolio aims to outperform the benchmark over a rolling five year period.
The Fairtree Growth Hedge Fund of Fund Portfolio aims to provide an aggressive risk growth opportunity by blending a combination of well diversified alternative asset classes and uncorrelated investment strategies. The portfolio targets to outperform the benchmark over a rolling five year period. Investors benefit from the exposure of award winning funds as well as robust capital allocation framework. The portfolio manager aims to provide investors with a combination of attractive returns and downside risk mitigation.
HOW IT WORKS
To start a New Investment is a three step process. We will guide you along each step because with us, it is all about the journey.
INVESTMENT DETAILS, SIGNATURES AND OUTSTANDING DOCUMENTS
We will pre-populate your forms for you and contact you to complete your investment information section. Along with your pre-populated forms, we will request documents which we require in order to complete your instruction.
You will simply need to:
- Validate and sign your pre-populated application forms
- Send through the required supporting documents which we will ask you for.
Your investment will be finalized by setting up a debit order or initial investment contribution.