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