Dear All
This is a brief information bulletin about Fedgroup’s Participation Bonds for those who seek a good yield to consider carefully.
FedGroup, the largest privately owned financial services provider in South Africa, have recently notified me that their new limited Participation Bond tranche is available.
There are two options to choose from. These investments fall within the ambit of the Collective Investment Schemes Act.
Both options allow for a monthly income from the interest earned by the investment capital or one can chose to reinvest the interest earned and take advantage of the power of compounding interest by enjoying a larger yield from your investment.
Fixed Option
Provides capital preservation with certainty of yield regardless of market fluctuations within a 5 year period.
The 5 year effective rate for this option is 10,55%.
Investment Option
Vehicle to invest where one has access to the initial capital invested in emergencies. Here the interest earned fluctuates in line with the market. The rate as at the 1st of November is 6.75% per annum.
|
Feature |
Fixed Option |
Investment Option |
| Term | Initial Capital to remain invested for 5 years | Initial capital can be withdrawn (with penalty) within 5 years |
| Interest | Can be paid out monthly or reinvested | Can be paid out monthly or reinvested |
| Rate | Fixed at 8.5% nominal rate, 10.55% for 5 year | 6.75% nominal rate that fluctuates relative to market rate |
There is a once-off upfront fee paid by Fedbond to the advisor of the equivalent of 2% of the capital amount invested. This fee is not taken off the capital sum invested.
There no ongoing fees and there are also no platform fees involved.
The minimum investment size is R5,000-00.
The interest income is taxed at marginal rates after the annual exemption has been taken into consideration.
A few more details about Fedgroup:
The Property portfolio encompasses commercial, industrial and retail properties of varying size and their value ranges between R30m and R50m.
They investigate the sustainability of the business within the property to ensure they are able to sustain the bond.
They utilise FSB approved property valuators that evaluate the properties in additional to their own expertise from their property division.
Their business operations are regulated by the Consumer Protection Act and is audited annually.
They do not loan more than 75% of the value of the property.
If you have any comments or questions, please contact me so that we can perform a full financial needs analysis in order to ascertain the suitability of such an instrument to your financial circumstances.
The Intasure Life Team
