Options expand for investment

Press, 25 July 1989, Page 29

Options expand for investment

The Christchurch branch of the Southland Building and Investment Society recently expanded its range of investment options with the introduction of Surebond which offers tax-free returns and a life insurance component. According to Tricia Moffat, Southland’s Christchurch branch manager, Surebond offers a goodquality, safe investment with reasonable returns.

The product was launched in Christchurch a week ago, but it was first offered by the society’s Invercargill branch last year. “The first year with Surebond was promising with a tax paid return of 9.5 per cent. Our forecast for the present year is 8.71 per cent,” Tricia Moffat says.

“All funds from Surebond go into the society funds along with the funds from all other investments. This means that Surebond funds enjoy the same security as any other investment in Southland.

“Eighty per cent of our funds are invested in residential properties which still represents the most secure investing available. The remaining 20 per cent goes into secure commercial and farming properties.” Looking at Surebond interest rates, one is tempted to ask, "What is so great about that? A fixed-term deposit offered by Southland will return almost 13 per cent.

Deduct the tax, and you are left with a similar return as being offered by Surebond.” That is, of course, true. In fact, according to Peter Dunne, Southland’s Invercargill financial representative, investors with fixed-term deposits may be better off after paying their own tax.

So, who is to benefit with Surebond?

Mr Dunne says there are two groups of potential Surebond investors — those paying the surcharge on national superannuation and investors not wanting to bother with provisional taxation or the withholding tax which will be introduced to savings and investment returns this year. Each year, Southland issues a statement to Surebond investors, but this should not be included with a tax return. Surebond is the first investment product issued by Southsure Assurance, Ltd, which is the insurance branch of Southland. All funds are invested in fixed interest securities which means the capital is not subject to market fluctuations. The minimum deposit is $2OOO and the minimum investment term is five years. There is an initial fee of four per cent (minimum payable is $100), but there are no on-going administration or management fees.

Termination fees only apply if the bond is cashed in before maturity.

Minimum charges ensure

the best returns are available to Surebond investors. Life insurance rates are a percentage of the bond value and are determined according to the investor’s age. For example, the top rate of 200 per cent is paid to investors aged 35 or under. This declines to one per cent for investors aged 75 and over.

With the introduction of Surebond, Southland’s Christchurch office has an attractive range of products to suit most investors.

Tricia Moffat says it is important for investors to know what type of investment they are getting involved in. “Our staff are able to advise, but we are not interested in any ‘hard sell’ tactics. We would rather send our clients away to get further independent advice if necessary.

"In the case of Surebond, we offer a 14-day trial period when investors have an opportunity to withdraw the initial investment in full.”

Investors may choose to use a number of Southland investment options to provide a balanced portfolio of short, medium and long-term investments.

Part -of the portfolio will include one of Southland’s savings accounts, Hips and Build Best where attractive rates are offered and the funds are readily accessible.