Investments
Flexible investments
A flexible investment is money you set aside without the lock-in of a retirement annuity or the contribution cap of a tax-free account. Unit trusts are the usual shape. You can generally add more and, subject to the fund, take money out.
A fit for goals with a date
Families use this kind of investment for a future school account, a home project that is still a few years away, or simply a pot that is not earmarked for retirement. If you might need the money, a locked product is the wrong tool.
The value moves with the funds you choose. A fall in the market is possible, including in a year when you wanted to withdraw. Time horizon matters more than a brand name.
Tax and fees sit in the open
Interest, dividends and capital gains can be taxed in your own hands, above the exemptions SARS sets. That is the trade for flexibility. An endowment handles tax differently, which is why the two get compared when someone’s tax rate is high. Neither is automatically better.
Ask for the fee in rand, not only in a percentage, and ask what you would pay if you moved the money. We would rather have that conversation early.
General information only. This page is not personal advice and it is not an offer. Product rules, tax and your own circumstances decide what is suitable. Read the official documents before you decide.
Questions we hear
Can I withdraw?
Usually yes, subject to the fund’s notice rules and any minimum remaining balance. This is the main practical difference from a retirement annuity. Confirm the rule on the specific fund before you rely on access.
Are returns guaranteed?
No. A flexible investment in market-related funds can go down. If a product offers a guarantee, it will be described in that product’s documents and it will have conditions.
Is this the same as a bank savings account?
No. Bank deposits and unit trusts carry different risks. A unit trust is not a bank deposit and is not covered in the same way. We will say which you are looking at.
Related
Tell us what you are planning for
A quote, a question, or a look at the retirement illustration. We reply from matt@ncj.co.za. What you read here is general information, not personal advice.