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Get a risk-free, tax-free return of 10% on a fully accessible investment

10 February 2020 12:53 PM
Tags:
Personal finance
Kieno Kammies
investing
Certified Financial Planner
Home loan
Mortgage
risk
bond
return
Paul Roelefse
cfp
access bond
Personal finance expert Paul Theron (CFP) discusses saving in an “access bond” and why it’s a near no-brainer.

When considering an investment there are five main aspects to consider:

  • Risk (the likelihood of losing money)

  • Return (how much you’ll earn from the investment)

  • Liquidity (the availability of funds)

  • Costs (fees, etc.)

  • Tax (e.g. capital gains tax)

Why an access bond is a good place to save:

  • You effectively get a guaranteed (i.e. risk-free), fee-free return of about 9.75% (currently the prime lending rate).

  • Your “investment” is instantly available.

  • It’s tax-free.

Kieno Kammies interviewed Paul Roelofse, a Certified Financial Planner.

Whatever you put in extra… becomes accessible… a very useful place to put cash... there aren’t many investments around now with a 10% guarantee…

Paul Roelofse, Certified Financial Planner

… Be mindful of paying it back as soon as you can. You don’t want to pay for it over 20 years, because then it becomes expensive…

Paul Roelofse, Certified Financial Planner

On a R500 000 loan, if you put just R1000 extra… you can reduce it by eight years!

Paul Roelofse, Certified Financial Planner

It’s very difficult to find a clean yield of 10% [on the stock market] after taxes, fees and costs… it’s a very good proposition!

Paul Roelofse, Certified Financial Planner

With these levels of uncertainty, risk is all around - where can you get tax-free money at 10% on call, no costs…?

Paul Roelofse, Certified Financial Planner

For more detail, listen to the interview in the audio below.

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10 February 2020 12:53 PM
Tags:
Personal finance
Kieno Kammies
investing
Certified Financial Planner
Home loan
Mortgage
risk
bond
return
Paul Roelefse
cfp
access bond

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