Investments

There’s no time like the present – how to take advantage of the current higher bond yields

Bond yields have increased due to current economic circumstances, but what does it mean for investors? At Glacier, bond yields affect the return we are able to offer on some of our investment solutions. Jeanine Myburgh, product manager at Glacier by Sanlam, points out that the higher the yield, the greater the guaranteed rate of return. Glacier offers various solutions that can help you take advantage of the current attractive rates. In this article, she examines some of them.

Of course, as with all investing, what you add to and remove from your investment portfolio will depend on your financial needs and investment objectives.

Life annuity

If you are retiring and want the peace of mind of a guaranteed income throughout retirement, now may be a good time to purchase a guaranteed life annuity.

Currently, a 60-year-old individual can get over R9 000 a month for a R1 million investment in a level annuity that is guaranteed for life. This translates into a return of roughly 10.8% per annum. A drop of only 1% in bond yields would result in an income that is almost 10% lower.

The benefits of a life annuity include:

An income that is guaranteed for life and not affected by movements in the markets.
You can choose the term (5, 10, 15 or 20 years) over which the payment of income will be guaranteed, even if you pass away.
If you want to protect your income against inflation, you can choose to increase your income by a certain percentage every year or opt for an inflation-linked annuity.

The Sanlam Fixed Return Plan

The Sanlam Fixed Return Plan may be exactly what you need if you are a goal-orientated investor who wants peace of mind. With this plan there are no surprises, and at a time when markets are volatile, a low-risk investment may provide some peace of mind.

How it works:

You make a lump sum investment – the minimum amount is R100 000.
A guaranteed maturity benefit, disclosed at the outset, is paid out after five years.

Keep in mind that, in general, the higher the bond yields, the higher the maturity benefit. Therefore, if you are in a position to commit your money for five years, now may be the time to do so.

Glacier Cash Option

If you want to make your money work for you and take advantage of the current returns offered, but still need the flexibility to withdraw funds when needed, you may want to invest in the Glacier Cash Option. This investment solution is cost-effective, low risk and geared to achieve inflation-beating returns.

Some things to note:

A minimum investment of R100 000 is required.
You have the flexibility to withdraw or transfer your money to any other Glacier product at any time.
A select range of top cash and income funds is available to choose from.

When it comes to investing, the value of a professional financial adviser cannot be over-emphasised. They will take a holistic view of your personal finances – including your income, expenses, needs, shortfalls, risk appetite and goals. So you would be well advised to consult an appropriately authorised financial planner, before making any investment decisions.

Glacier Financial Solutions (Pty) Ltd is a licensed financial services provider.

Sanlam Life is a licensed life insurer and financial services provider and a registered credit provider (NCRCP43)

The Sanlam Fixed Return Plan is underwritten by Safrican Insurance Company Ltd, a licensed financial services provider.