You are now leaving Centuria Australia
and entering Centuria New Zealand.
Meet Alana and John Parker. These Sydney based recent retirees are the proud grandparents of Olivia, an energetic and troublemaking six year old who spends her days running around, pretending to be a dinosaur. While she plays without care, Alana and John would like to set aside something for her future.
Alana and John were both self made entrepreneurs and appreciate the support young people need when they reach adolescence. They want to set aside some money for Olivia to benefit from one day, but they want to do so in a tax efficient way that will grow over time.
That’s why they chose Centuria LifeGoals, which as well as being a simple, flexible and tax efficient investment solution, can also be extremely useful for passing wealth onto children and grandchildren.
Centuria LifeGoals works for investors by using the increasingly popular investment bond structure which is essentially a mixture of a managed fund and a life insurance policy. The most exciting features of Centuria LifeGoals include:
A Centuria LifeGoals investment gives you real flexibility so you can tax efficiently invest in a way that adapts to your financial situation as it evolves. And, because so many investors want to create future wealth for their kids and grandkids, we’ve specially created the Centuria LifeGoals Child Plan. To understand how this works, let’s go back to the Parker’s scenario.
First, Alana and John set up a Centuria LifeGoals Child Plan which is the same process as opening a regular Centuria LifeGoals account, except with an additional section in the investment application.
When setting up a Child Plan, the child it’s intended for has to be below the age of 16 at the time of the application. Ownership will automatically transfer to them by the time they reach the nominated vesting age which can be between 10 and 25 years old. The vesting age can be changed at any time and doesn’t alter the original commencement date of the account.
Alana and John set up a Centuria LifeGoals Child Plan for Olivia at six years old with an initial investment of $10,000 and contribute $200 per month in the first year. They will increase the regular contribution by 25% per annum. Because they are investing for the long term they chose to invest 50% in the Australian share option and 50% in the international share option. They’re planning to gift Olivia the whole amount when she is 16 years old and set this as her vesting age.
When Olivia reaches her vesting age, the account automatically transfers to her. No tax is incurred by the transfer for either Olivia or her parents and by this point, following regular and increasing contributions (totaling $89,806), the total value of the account is $109,878* after tax and fees.
Centuria LifeGoals Child Plan will have allowed Olivia’s grandparents to create a considerable sum on her behalf and easily transfer it to her. The responsibility of the money will then be hers and at 16 we’re sure she will be optimistic about the options now open to her (although to Alana and John she’ll always be their little dinosaur).
This scenario has been produced purely to illustrate how Centuria LifeGoals can be used by different investor profiles and are is fictional.
1. In years 9 & 10 this difference is discounted by one-third and two-thirds respectively.
*The investment returns are calculated using the LifeGoals Investment Forecaster Calculator, which can be accessed on the Centuria website (centuria.com.au/investment-bonds/investment-forecaster-tool/). Please refer to the calculator’s “Returns Calculation Assumptions” for the assumptions used in calculating the investment returns figure.
The investment returns are illustrative in nature and should not be taken to provide an estimate of the amount of investment earnings you will receive. The actual returns may differ to the calculated returns. Centuria does not guarantee the performance of the financial product, the repayment of capital or any income or capital return.
LifeGoals can be used for a number of investment scenarios. Which investor profile are you?