Bonds per­fect as child’s school fund

Townsville Bulletin - - Investor -

AN in­no­va­tive prod­uct f r o m Aus t o c k L i f e – ChildBuilder Bonds – has all the ad­van­tages of or­di­nary in­vest­ment bonds but have some ex­tra bells and whis­tles as they are of­fered un­der a mas­ter trust sys­tem.

This en­ables the in­vestor to spread their funds across a range of whole­sale man­aged funds, but best of all also al­low switch­ing be­tween the funds at any stage with no cap­i­tal gains tax.

The bonds are ini­tially held in the name of the i nvest o r , us ual l y t he par­ent or grand­par­ent, with a pro­vi­sion that the pro­ceeds will vest in the nom­i­nated child at a set age that can be be­tween 10 and 25.

David and Kate are de­ter­mined that their oneyear-old son, Ni­cholas, wil l g o t o a p r i v a t e sec­ondary school.

They make an ini­tial in­vest­ment of $ 2500 in a ChildBuilder Bond and then make a com­mit­ment to in­vest $ 200 a month into the bond. The out­come is very im­por­tant to them, so they take ad­van­tage of the 125 per cent add on fea­ture and i ncrease t heir con­tri­bu­tions by 25 per cent each year.

If the fund earns a net 7 per cent a year there will be $ 137,000 there when Ni­cholas turns 12.

As this will more than meet their tar­get they would then stop con­tribut­ing and start mak­ing reg­u­lar with­drawals.

Af­ter al­low­ing for inf l ation t hey cal­cu­late that the school fees will av­er­age $ 20,000 a year over the next six years.

If all goes to plan there should be $ 55,000 left in the bond when Ni­cholas fin­ishes school.

Be­cause these bonds are a tax-paid in­vest­ment, there is noth­ing to de­clare on any­body’s tax re­turn each year, nor is there any tax on with­drawal or trans­fer to Ni­cholas.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.