Investment bonds are longer-term (generally 10-year) structures that let you invest your money in a simple, tax-friendly way – without needing to complete yearly tax paperwork.
This simplicity is why more people are now adding them to their portfolios. You can start with a lump sum and then make annual contributions, which makes it easy to build your portfolio over time.
The bonds also offer flexibility. If circumstances change, ownership/beneficiary of the bond can be updated easily, which can be helpful for families planning ahead.
One reason people are taking a fresh look at investment bonds is that they can work well outside super and outside your estate. This means you can nominate beneficiaries directly and the money can often pass to them quickly and without delays.
Another benefit is the significant tax treatment over the longer term. If you keep the bond for 10 years and do not make withdrawals during that time, any gains will generally be received without personal capital gains tax. This can make them useful for education funding, future planning, estate planning or quietly building wealth in the background.
There are important rules/limitations and considerations. So, it is essential to seek advice before making a decision.
Mandy Newman, director, AJN Financial, 15/13 Poinciana Avenue, Tewantin, 5430 6631, ajnfinancial.com.au
This column is part of our Business 2 Business (B2B) series featuring industry leaders sharing their expertise. For more great articles, SUBSCRIBE to our FREE news feed, direct to your inbox daily. All you need to do is enter your email below.
