Investments options and the easiest way to save money

I recently ran a questionnaire on SurveyMonkey and most respondents indicated they would like more information on investments and the different options.

Below a little “cheat sheet” of investment options available (all of them are available in offshore as well as US Dollars, GBP and Euro).

Option Minimum term Pro’s Con’s
Endowment - SA
Debit order – R500pm min
Lump sum - R25 000 min
5 years
  • Tax advantage - pays out tax-free after 5 years
  • Great for estate planning, can nominate beneficiaries
  • Great for goal-based investing, forces you to stay on course (holidays, education)
  • Minimum 5 years, significant penalties when you withdraw before then
  • Flexibility - can only increase the premium by 20% per annum and only lump sums in the first year
Flexible Investments
Debit order - R1 000pm min
Lump sum - R50 000
None (open-ended)
  • Very flexible, can stop debits anytime, activate anytime, do lump sums, increase and decrease debits
  • Wide variety of funds to choose from
  • Low fees
  • People tend to withdraw regularly, so never really seeing the value of compounding
  • Forms part of your estate and cannot nominate beneficiaries
Tax-Free Savings
Debit order – R500pm min
Lump sum – R36 000 (per year)
None (open-ended)
  • Growth is taxfree and the withdrawals as well
  • Very flexible, can stop debits anytime, activate anytime, do lump sums, increase and decrease debits
  • Wide variety of funds to choose from
  • Low fees
  • People tend to withdraw regularly, so never really seeing the value of compounding
  • The real value of tax-free only seen after 10 years of regular investing
  • Limits to what you can contribute per year (R36 000)
Offshore
Flexible Investments
None (open-ended)
  • Hard currency investment
  • Very flexible, can stop debits anytime, activate anytime, do lump sums, increase and decrease debits
  • Wide variety of funds to choose from
  • Low fees
  • Suitable for people who travel overseas a lot and for kids studying overseas
  • Admin
  • High minimums – US$10 000 lump sum & $2500
  • Debit orders $200pm
  • Tax – taxed locally
  • Estate planning – You might need a foreign will as well. Foreign executors charge extremely high fees.
Offshore
Endowment
5-year minimum (open-ended after 5 years)
  • Hard currency investment
  • Wide variety of funds to choose from
  • Low fees
  • Good for people who travel overseas a lot and for kids studying overseas
  • Estate planning – no foreign will needed
  • Tax – taxed within fund
  • Admin
  • High minimums – US$10 000 lump sum
  • Debit orders $200pm
  • Flexibility

The easiest way to save money

One of the easiest ways to save money is to review your short-term insurance. I have a lot of clients who we have recently saved a lot of money because we reviewed their current short-term and found ways to save them money.

Discovery Insure with their Vitality Drive fuel rewards has been working very well for myself and a lot of my clients (see below), but I can also offer Santam, Mutual and Federal, Momentum and First4Women.

Discovery Insure Vitality Drive