GENERATION LIFE
INVESTMENT BOND PROVIDER OF THE YEAR
An investment bond is a type of investment product that tries to capture the best of two worlds: the returns of a managed investment product and the predictable payments from an insurance policy.
This year’s inaugural winner of Investment Bond Provider of the Year is Generation Life, a Melbourne-based company that has been offering retirement products for almost two decades. It was selected by Plan For Life, actuaries & researchers, ahead of the competition in several categories, including product features, customer service and the company’s financial position.
One bond that will appeal to parents and grandparents is ChildBuilder. You pay a lump sum upfront and leave the funds for 10 years. If the money is not withdrawn in that time, it benefits from a flat 30% company tax treatment (paid for by Generation Life) and becomes tax-free for the life of the product after that.
The minimum investment is $1000, coupled with a regular savings plan. ChildBuilder is perfect for young couples who want to save for their children’s education fees.
Another product is a bond that helps people set aside money for funeral expenses.
But the product that earnt Generation Life the top gong is LifeBuilder, which suits investors who want a tax-effective vehicle outside super. It is ideal for salaried professionals who pay more than 30% in personal taxes.
As with ChildBuilder, it comes with an “estate planner” feature that allows the investor to nominate how they want to pass on their wealth.
Felipe Araujo, general manager of distribution, says Generation Life strives to stay ahead of its competitors by expanding the underlying investment options of the bond, lowering the total investment fees (and charging lower fees based on assets under management), and maintaining a “highly recommended” rating from researchers.
He says the bonds are popular with highincome professionals and baby boomer grandparents aiming to pass on their wealth straight to their grandchildren, skipping a generation.
“One of the little-known facts about investment bonds is that, unlike other assets, a creditor cannot access the funds if you go bankrupt,” he says.
Other finalists this year are AIA and Futurity Investment Group.
“It was a very close call to choose a winner as all providers offer very competitive products,” says Rael Solomon, regional managing director at Plan For Life, actuaries & researchers.
According to Stockspot, the online investment platform, an average-growth investment bond has returned 4.7%pa in the five years to December 2021, while a portfolio of exchange traded funds returned 10.4%pa over the same period. However, these figures are illustrative only, as there are many other considerations.