Endowments

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fire2029

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Hey guys,

I am considering investing and making use of an endowment*. I am looking at various options out there.

- Discovery: Fees are nuts! One of the options gives an admin fee of 4%pa. Also, hectic terms and conditions.
- Outvest: Fees are good, but can only invest in a fixed deposit type investment via Absa.
- Coronation: No additional cost to an endowment when investing in Coronation fund/s. However limited to investing in Coronation funds.
- Allan Gray: No additional cost to an endowment when investing in Allan gray list of funds. However limited to Allan gray range of funds. (I think)

I like products without risk cover or bonus premiums tied to them. These make the products complex. I like it simple.

Can anyone share any good endowment options out there for a DIY investor.

* PS. yes my marginal income tax rate is higher than 30%. This is long term. More than 5 years. Yes, I already make use of a TFSA.
 
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Endowments isn't really related to tax at all (if you stick within the rules). Keep it for 5 years (and you wont be penalized in short). Its taxed within the product itself.
 
zerocool2009 said:
Endowments isn't really related to tax at all (if you stick within the rules). Keep it for 5 years (and you wont be penalized in short). Its taxed within the product itself.
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Sure. But that's exactly why I am considering an endowment. Because of the tax benefits of endowment vs me as an individual tax payer. The effective capital gains tax rate within endowment (12%) is better than my personal effective capital gains tax rate (18%).
 
I have a few endowments myself (because of tax), and if I die, its excluded from the estate too.
 
zerocool2009 said:
I have a few endowments myself (because of tax), and if I die, its excluded from the estate too.
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Which institutions are these with? What are the costs of your endowments? Trying to get a good picture of what is out there & costs..
 
fire2029 said:
I like products without risk cover or bonus premiums tied to them. These make the products complex. I like it simple
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If you like it simple, then stay the F away from Discovery and all the interlinked products. Working out what is what will drive an actuary nuts....

I was happy with my Coronation Endowment. They have a really wide range of funds available that gave me what I wanted at the time
 
Consider looking at a pure LISP platform like Momentum Wealth or Glacier. Relatively low, transparent fee structures and large fund range.

Endowments are not "excluded' from an estate upon death, they are a deemed asset, which means that they do attract estate duty, however no executors fees are charged.

Costs on a LISP consist of the following: Fund/Investment manager fee, admin/platform fee and advisor commission.
 
I google it now. It is for sure not estate bound:
Endowments allow for the nomination of beneficiaries on the policy, so money is immediately passed on to beneficiaries and this is not dependent on winding up an estate.
 
Another sentence :
The endowment comes to an end when the last life assured dies. ... The beneficiary (or beneficiaries) for proceeds will receive the money from the investment when the last life assured dies. Your money will be paid out directly – i.e. the beneficiaries do not need to wait for the estate to be wound up.

Endowments are in other words totally excluded from the estate. How I see it, you need a beneficiary added. If you die, that person gets that lump sum (full stop)
 
gazzak said:
LISP platform like Momentum Wealth or Glacier
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Isn't Glacier = Sanlam? I was sold a crappy Sanlam policy by a "investment adviser" (more like policy salesman) a long time ago, and since then I haven't been a Sanlam fan.

I'm not saying they are bad still but for me that bridge has been burned
 
zerocool2009 said:
money is immediately passed on to beneficiaries and this is not dependent on winding up an estate.
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That doesn't mean that it passes to beneficiaries tax-free.


Also, just think about it. If it was that easy...

And from the horse's mouth:
You can nominate beneficiaries to receive the money or to take ownership of your investment. Although your beneficiaries will not have to wait for the estate to be wound up, the value of the investment will still be included in the estate for the calculation of estate duty.
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Allan Gray | Endowment | South Africa

If your marginal income tax rate is higher than 30% and you want to benefit from tax savings, you can use an endowment for your long-term savings goals.
www.allangray.co.za www.allangray.co.za
 
Remember this, its taxed within the product itself. So I doubt it would be taxed again.

Let me read up.
 
"Endowments allow you to nominate beneficiaries which means on your death the money invested will be payable directly to the beneficiaries and they are not required to wait for the estate to be wound up."

www.moneyweb.co.za

Moneyweb

Business, Financial and Investment news and tools
www.moneyweb.co.za www.moneyweb.co.za
 
zerocool2009 said:
Another sentence :
The endowment comes to an end when the last life assured dies. ... The beneficiary (or beneficiaries) for proceeds will receive the money from the investment when the last life assured dies. Your money will be paid out directly – i.e. the beneficiaries do not need to wait for the estate to be wound up.

Endowments are in other words totally excluded from the estate. How I see it, you need a beneficiary added. If you die, that person gets that lump sum (full stop)
Click to expand...
If a beneficiary is nominated, the funds will be paid directly to the beneficiary and will not flow to the estate, they are however still a deemed asset in the estate this subject to estate duty.
 
RandomGeek said:
Isn't Glacier = Sanlam? I was sold a crappy Sanlam policy by a "investment adviser" (more like policy salesman) a long time ago, and since then I haven't been a Sanlam fan.

I'm not saying they are bad still but for me that bridge has been burned
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Correct, Glacier is part of Sanlam, however it is their pure LISP platform and works completely differently to a “life insurance” based investment platform.
 
Endowments form part of your estate duty calculation, it is a deemed asset. Same as life cover, even if it has a nominated beneficiary (excludes spouse). You save on executor fees.

I don't really feel like googling for proof, but you will find it. `
 
RandomGeek said:
Isn't Glacier = Sanlam? I was sold a crappy Sanlam policy by a "investment adviser" (more like policy salesman) a long time ago, and since then I haven't been a Sanlam fan.

I'm not saying they are bad still but for me that bridge has been burned
Click to expand...

Sanlam and OM have arguably the best insurance products on the market. Don't let a bad experience dictate whether you take out something from them in the future.
 
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