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Friday, May 29, 2015 - 02:16
Saving draw

The Discovery Tax-Free Flexible Investment Plan was made available from April 2015. It provides clients with zero tax on their investment growth, thereby providing an attractive vehicle for clients in which to save.

  “The new product is built on the same low-cost basis as the existing Discovery Core Flexible Investment Plan. This gives access to a wide range of Discovery Funds as well as externally managed funds, with full flexibility. Clients can tailor the Tax Free Flexible Investment Plan according to their specific risk profiles and needs” says Discovery Invest’s Craig Sher.
  To take part in this tax-free plan, investors can deposit either a once-off lump sum of R30 000 a year or recurring contributions of between R850 and R2 500 per month. Contributions to this type of plan, however, have a legislated limit. While this will be adjusted over time by SARS, an individual will only be allowed to contribute up to R30 000 a year and in an overall lifetime an amount of R500 000.
  The Discovery Tax Free Flexible Investment Plan does not charge any initial fees and only has an annual administration charge of 0.35 percent plus VAT on Discovery Funds and 0.55 percent plus VAT on external funds. Financial advisers can, however, charge initial and ongoing fees in addition to this for financial advice.
  Opting for this tax-free savings plan is not complex. Sher recommends, however, that investors speak to a financial adviser to assist them in building a balanced portfolio according to their particular needs.
  A financial adviser will assess the client’s risk profile and help them choose funds. “Investments need to be monitored on an ongoing basis. An adviser is often well equipped to do this as well as make changes as markets shift direction,” says Sher. “They can ensure that tax benefits are maintained and advise so that savings are not withdrawn prematurely.” The tax-free savings accounts make provision for the investor to withdraw the investment at any time, however, leaving money invested and earning compound returns provides a significant long term benefit.


Copyright © Insurance Times and Investments® Vol:28.5 1st May, 2015
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