MyMoney Online

3 Reasons why you should have an endowment

Reason 1 – Tax effective for high tax payers

Following last weeks topic on why you should not have an endowment it stands to reason that you will benefit from investing in an endowment if your tax rate is higher than 30%. The latest budget proposals have raised the top marginal tax rate to 41% which presents a benefit for taxpayers in this bracket benefiting even more when compared to a unit trust investment.

_What _needs to be considered are the exemptions on the interest (R23 800) and capital gains tax (R30 000). If these will be taken up by other discretionary investments over the period of the endowment then the combined investment will be that more tax effective.

Reason 2 – Offshore Investments

The taxation applied to offshore investments is tricky and complicated. By wrapping your investment in an endowment policy you avoid the headache as the administrators are obliged to pay over the applicable taxes various taxes to SARS on your behalf.

Reason 3 – Payable outside the estate

The endowment is a policy contract which allows for a nominated beneficiary. This enables the investment to be paid outside the estate in the event of the death of the owner. This is pretty useful in terms of providing much needed access to funds whilst the estate is being wound up. Furthermore, additional owners can be added to an endowment allowing the survivors to continue with it for as long as they wish instead of having to cash it in in the event of death.

It horses for courses when choosing an endowment. The main advantage is the tax benefits which tend to benefit the higher taxpayers.

Read more from Paul Roelofse at www.investforlife.co.za


This article first appeared on 702 : 3 Reasons why you should have an endowment


Recommended

by NEWSROOM AI
Read More
Living together, but not married? Tips on arranging your finances…

Living together, but not married? Tips on arranging your finances…

Personal financial advisor Warren Ingram has advice on keeping the money side of the relationship healthy when shacking up.

Drowning in debt? You may be able to refinance (but there are pros and cons)

Drowning in debt? You may be able to refinance (but there are pros and cons)

Galileo Capital Financial Advisor Warren Ingram on "good debt", "bad debt", "neutral debt" and consolidation your debts into one.

2 best companies on the JSE to invest in now (by Nefg Fund Managers)

2 best companies on the JSE to invest in now (by Nefg Fund Managers)

Not sure which shares to buy? Bruce Whitfield interviews Gerbrand Smit, Chief Investment Officer at Nefg Fund Managers.

Don’t earn much? How to best invest tiny amounts...

Don’t earn much? How to best invest tiny amounts...

Earn peanuts, but want to start investing? You can now buy even tiny fractions of a share at a time. And it's very simple!

How to talk to your kids about money

How to talk to your kids about money

What does your behaviour teach them? The Money Show’s Bruce Whitfield interviews Certified Financial Planner Kim Potgieter.

3 Reasons why you should not invest in an endowment

3 Reasons why you should not invest in an endowment

Weekend Breakfast's Financial Fitness Coach Paul Roelofse shares some sage advice relating to endowments...

Popular articles
If all goes as planned, there will be no load shedding this week - Eskom

If all goes as planned, there will be no load shedding this week - Eskom

Eskom spokesperson Khulu Phasiwe says there will be no load shedding this week as Eskom looks to get back to normal.

This video doorbell let's homeowners check on the front door from their phones

This video doorbell let's homeowners check on the front door from their phones

On Technobyte this week the traditional doorbell goes hi-tech, Uber wants to fly you and Google is launching an AI lab in Ghana.

[WATCH] Eusebius Mckaiser: I call BS on Malema's racism targeting Indians

[WATCH] Eusebius Mckaiser: I call BS on Malema's racism targeting Indians

Show host Eusebius McKaiser says EFF's leader Julius Malema's comments on Indians are grossly unacceptable and irresponsible.

[WATCH] Portuguese commentator goes wild over Christiano Ronaldo

[WATCH] Portuguese commentator goes wild over Christiano Ronaldo

Check out the latest tweets and social posts on What's Gone viral with Khabazela...

[LISTEN] State capture crippled our economy - Pravin Gordhan

[LISTEN] State capture crippled our economy - Pravin Gordhan

Minister of Public Entreprises Pravin Gordhan explains the condition of state owned enterprises and the changes he is making.

WCED objects to education dept making history compulsory

WCED objects to education dept making history compulsory

MEC of Education in the WC Debbie Schäfer says South Africa doesn't need more historians but children should be economy savvy.

Here's how to check your load shedding schedule in Cape Town

Here's how to check your load shedding schedule in Cape Town

Stage 1 load s​hedding has been declared nationally. The City of Cape Town has urged residents to take note of the schedules.

Man who dumped body of family dog in street demoted at top JHB law firm

Man who dumped body of family dog in street demoted at top JHB law firm

Media law guru Emma Sadleir warns employees online that there are many potential events that could bring a company into disrepute.

Don’t earn much? How to best invest tiny amounts...

Don’t earn much? How to best invest tiny amounts...

Earn peanuts, but want to start investing? You can now buy even tiny fractions of a share at a time. And it's very simple!