Using an investment bond
The following Case Study shows how to use an Investment Bond as a Child Endowment Plan. This plan effectively minimises tax for the stakeholders, and simplifies the estate planning ramifications.
The Case Study –
Steve, an airline captain and sworn bachelor is the proud god-parent of best mate James’ first born, Stephanie.
He wants to set up an investment for Stephanie to give her a financial head-start in life.
Steve wants a “Set-and-Forget” investment where he doesn’t have to worry about tax implications. In particular, he doesn’t want to be paying tax on investment returns himself. And he wants something that will automatically vest for Stephanie when she turns 21.
Strategy and outcomes:
Steve decides to set-up a ChildBuilder and invests $5,000 as his child endowment plan for her.
Given the very long time-frame, he selects three Australian share based options from the Bond’s menu. He also sets a few Intended Purposes –
- overseas travel,
- a first home deposit, but
is not really fussed how Stephanie might use her Bond.
Steve calculates that on Stephanie’s 21st birthday, the $5,000 invested in her ChildBuilder should be worth $30,544. He has based this on an average 9% p.a. after-tax rate of return (net of fees) on the invested funds.
At the Bond’s maturity, Stephanie is able to access her Bond as a Tax-Free lump sum withdrawal. She also has the option to keep it as her own investment for ongoing/ future access.
<This case study is a hypothetical example and not meant to illustrate the circumstances of any particular individual. It is not based on actual or forecast investment returns for ChildBuilder Bonds. Past performance is not indicative of future performance.>
Establishing your own Child Endowment Plan
Set your child up for a good financial start in life
The team of experienced financial planners at ContinuumFP has a range of effective investment strategies to accomplish this. To make an appointment with one of them for guidance and advice on the matter –
- phone our office, on 07-34213456, or
- at your convenience, use the linked Make A Booking facility.
Our appreciation to Austock Life for approval to use this Case Study from their Child Builder ™ Bonds brochure.
(This article was first posted by us in March 2011. It has occasionally been refreshed/ updated, most recently in February 2025.)
