How to use the calculator

The calculator enables you to alter the following variables:

  1. Your initial investment – you can set the amount you invest into the bond in the first year.
  2. Your ongoing contributions – you can select a specific amount you pay regularly throughout the year or as an annual once off lump sum. You can also elect to increase these contributions in line with inflation up to the maximum allowable under the 125% rule.
  3. Select the 125% contribution rule – by selecting the 125% rule, the calculator will increase your ongoing contributions by 125% of the previous year’s contributions. If you do not select the 125% rule only those ongoing contributions you nominate will be included in the calculator.
  4. Nominate your annual investment return – you can nominate a return ranging from 2% to 10% after tax and fees. If you do not select a return a default rate of return of 4% p.a. is selected for you in order to run the model.
  5. The annual investment return scale is a useful tool for demonstrating the effect that returns can have on any outcome. Centuria encourages you to run the calculator with a number of different return scenarios.
  6. You can nominate your investment goal – the calculator allows you to set a goal for the value of your investment you hope to achieve by the end of a 10 year period.

Assumptions and limitations

  1. The projections generated from this model are a general illustration of the potential outcome from an Investment Bond policy that is held for 10 years. The projections rely on a number of assumptions in order to calculate the projected outcome and if one or more of these assumptions are not met, the projected outcome will differ. These assumptions are set out in detail below.
  2. This projections generated do not take into account the particular circumstances, needs or objectives of any person.

Investment returns

  1. The calculator enables you to select a rate of return from 2% to a maximum of 10% percent per annum.  This return is a net return, that is, it is after statutory tax and after any management fees.
  2. The tax rate of 30% is the maximum rate of tax payable within a bond. Actual taxation rates may be lower due to factors such as dividend imputation for Australian shares held within the portfolio.
  3. No allowance has been made for any fee(s) you may agree to pay your financial adviser from the Bond. It is assumed that no such fees have been paid. The contributions made to the bond are assumed to be net of any fee agreed between you and your adviser. You should seek advice from your financial adviser on the impact any agreed fee may have on your investment.
  4. Whilst the calculator enables you to set the annual after tax and after fee return that you consider appropriate in order to determine outcomes based on that return, a default rate is selected and automatically set if you do not alter the return in the calculator.
  5. The default rate of return selected is 4% p.a. after tax and fees. This default has been selected as a reasonable long term investment return potential of an investment bond invested in a generic ‘balanced’ portfolio of assets.
  6. A reasonable average/representative value for the proportion of fund assets that constitutes a balanced fund is one that holds 70% growth assets and 30% defensive assets.  Growth assets are predominantly Australian and International shares and property. Defensive assets are income producing assets like fixed interest bonds and cash.
  7. For the purpose of the default after tax and fees return of 4%, a net management fee of 1.875% p.a. is assumed. This fee is based on Centuria’s fee for a bond with a balanced portfolio and includes all investment management costs. Fees charged by other financial service providers may differ and changes to fees will affect the net return.
  8. The annual investment return scale allows you to adjust the rate of net return to test the projected outcome in a range from 2 to 10% return per annum after taxes and fees. Returns will vary depending on the assets and risk profile of a fund.
  9. The annual investment return scale is a useful tool for demonstrating the effect that returns can have on the illustrative outcome.  Centuria encourages you to run the calculator with a number of different return scenarios.
  10. For the purpose of the calculator it is assumed that the return will be consistent throughout the 10 year period the bond is held.
  11. Investment returns achievable within a bond will vary depending on the investments held and risk profile of the bond. Returns can vary considerably and the volatility of returns will also vary and some bonds may experience negative returns for one or more years. The calculator is an illustrative tool only and the outcome may or may not be achievable in your investment.

Today’s dollars and discounting for inflation

  1. The investment balance calculated is shown in today’s dollars and has been discounted for inflation.  By discounting for inflation, the investment balance seeks to provide an indication of the purchasing power of the balance in today’s dollars (as prices are assumed to increase in the future).
  2. The default inflation rate used to discount future returns back to today’s dollars is based on the mid-point of the RBA’s target range for price inflation (CPI) of 2.5% plus 1.0%. Historic analysis indicates a medium-term difference between price (CPI) and salary inflation of approximately 1.0%. Accordingly, the default inflation assumption is 3.5% (i.e. 2.5% price inflation plus a margin over this of 1.0%). The actual rate of inflation may differ significantly from this assumption.


  1. It is assumed that regular contributions are paid evenly over the policy year.
  2. It is assumed that future lump sum contributions are paid at the end of the policy year.
  3. You can make additional contributions during the first 12 months. After the first Bond anniversary, you may invest up to 125% of the total amount invested in the previous Bond Year without changing the original start date for tax purposes. This means that additional investments can have a term of less than 10 years, and the growth or earnings can still be withdrawn after 10 years from the start date without further taxation implications.
  4. If you elect to increase your contributions in line with inflation, contributions will be increased by 3.5% p.a. which is based on the default inflation assumption noted in paragraph 15 above (up to a maximum of 125%).


  1. The calculator assumes that the date set on your computer is correct. Projections are started from this date.
  2. The amounts shown are a guide only. They do not represent the performance of any particular investment. They depend on the assumptions being accurate and if there is any change in the assumptions, the amounts will change.


What will the calculator show you?

The calculator will show you a theoretical balance in your investment bond at the end of a 10 year period based on the variables you have entered and the assumptions detailed in the assumptions tab below.

The theoretical balance at the end of the 10 year period is shown as a net return, that is, it is shown after tax and after fees. The balance is also show in ‘today’s dollars’, which means that it has been discounted for the effect that inflation may have on the purchasing power of your money in the future. For example, $1 today may buy you less than $1 in 10 years’ time having regard to inflation.

If you have set an investment goal the calculator will provide you with a graphical representation of your balance vs your goal.

^ If you elect to pay a fee to you financial adviser, the initial and subsequent contributions to your bond input into the calculator is assumed to be the net amount invested. For example, if you have $100,000 as an initial investment and agree to pay $3000 to your financial adviser as an upfront fee, the amount you should input into the calculator is $97,000.

What won’t the calculator show you?

It is important to remember that the calculator is a tool only and does not provide you with a projection or forecast for any investment bond issued by any entity. Each bond will have different investments and a different risk profile.

The outcome is illustrative only and is based on the assumptions detailed in the assumptions tab below. If one or more of the assumptions are not met, the outcome will differ to that shown. Investment returns in particular will vary from investment bond to investment bond and from year to year and may experience negative returns for one or more years. It is therefore important that you use the investment returns variable to understand the impact that a change in return will have on the outcome.

What are your next steps?

After you have run a number of different scenarios through the calculator to gauge the level of investment (both initially and in ongoing contributions) required to potentially achieve your goal you should download and read the PDS for any investment bond you wish to consider for investment. Centuria also recommends that you speak with a licensed financial adviser to help them select a bond or investment option that is right for you.