The upside of endowments

OVERLOOKED: TAX AND ESTATE-PLANNING BENEFITS, TO MENTION BUT A FEW

Lower costs, increased investment options and better transparency have addressed previous scepticism.

Endowments are often overlooked when it comes to portfolio planning, but they offer many benefits to investors. They are investment “wrappers” underlying investments in equities, property, bonds and cash that offer tax and estate-planning benefits, especially to people in a 30%-plus tax bracket.

Originally considered expensive, inflexible and opaque, decreases in cost, increased investment options and better transparency make endowments a good option for tax-efficient discretionary savings.

Roenica Tyson at Glacier by Sanlam, says there have been some misconceptions based on endowment wrappers’ history. “These myths have, however, been dispelled if you look at how they are currently positioned, with flexibility and investment choice.

“If one looks at the discretionary savings space, where there are a lot more taxpayers in the 30%plus marginal tax bracket, using an endowment as a tax-wrapper makes sense. Given the amount of savings in that space, it’s clear that too many investors are missing out on the benefits endowments can provide.”

Tyson says endowments offer investors flexibility and a wide range of investment options structured around specific investment