THE ALEXANDER FORBES TAX-FREE SAVINGS ACCOUNT START YOUNG START TODAY START NOW THE EASY, FLEXIBLE, AFFORDABLE WAY TO SAVE PORTFOLIO GUIDE
The Alexander Forbes Tax-Free Savings Account is a simple, flexible and affordable way to start saving for a long-term goal. If you stay invested longer there is a greater probability of rewards. There are two reasons for this. The longer you leave your money, the more you benefit from compound interest and the greater your expected tax saving. I want to save for my child s future Every parent wants to ensure the best future for their children, but the ever increasing cost of school and university fees makes it a challenge. The Alexander Forbes Tax-Free Savings Account makes it possible for you to put away money every month to enable you to save for a better education for your children. The sooner you start, the less you have to worry about achieving your goal. The Alexander Forbes Tax-Free Savings Account helps you to save for your child s education, because you can save over many to benefit from both the tax savings and the effects of compound interest. YOU NEED R500 000 + IF YOU SAVE R500 A MONTH IN 18 YEARS TIME OVER 18 YEARS for your child s university fees in the Alexander Forbes Tax-Free Savings Account. R R Benefit of using tax-free savings for education Assumptions Investment in local multi-asset class fund (70% shares, 15% bonds, 15% cash) based on expected future returns over next 20. Assuming you have no other discretionary savings and contribute R550 a month increased with inflation. A cost-saving of 0.07% is assumed. These values are not guaranteed and are for illustrative purposes only.
I want to boost my retirement savings You can use the Alexander Forbes Tax-Free Savings Account to enhance the savings in your company retirement fund. But unlike your retirement fund, you can access your money if you need it. Post-retirement medical aid Medical costs continue to increase above the average inflation rate. Your income in retirement might struggle to keep up with inflation, never mind cost increases above inflation. And this is when you really need a good medical aid. If you can start saving for these expenses before you retire, you may not have to worry about affording good medical aid and healthcare once retired. The Alexander Forbes Tax-Free Savings Account is a simple way help your saving for retirement. Easy access You may have even less access to your retirement fund savings when the government implements proposed changes to retirement regulations. This is why the Alexander Forbes Tax- Free Savings Account is a great way to save more money tax free for your retirement, but still have access to your money. More exposure to shares By law, retirement funds can only invest a maximum of 75% of your savings in shares (equity). There is no such restriction on investments in the Alexander Forbes Tax-Free Savings Account. This means you can invest 100% in shares if you choose an aggressive portfolio because you are younger, will be able to invest for a long time and you are willing to take the investment risk. Drawing an income in retirement Once you ve built up your savings in the Alexander Forbes Tax- Free Savings Account over time, you can draw an income from these savings and you won t have to pay any tax on withdrawals. I want to boost my general savings If you re putting money into a savings account, you have to pay tax on the interest over current tax exemptions. If you intend these savings to be a long-term investment, it may be better to put it into the Alexander Forbes Tax-Free Savings Account, because you won t pay any tax on your investment returns. Long-term benefit of tax-free savings Assumptions Investment in 100% share (equity) fund based on expected future returns over next 20. Assuming you have no other discretionary savings and contribute R2 500 a month increased with inflation. A cost-saving of 0.40% is assumed. These values are not guaranteed and are for illustrative purposes only.
Choosing a Tax-Free Saving Account Portfolio Risk profile What your investment goal is Preserve your capital investment Earn some income. Generate some capital growth over the short term Achieve above inflation returns Generate capital growth over the long term Achieve longterm inflationbeating returns How much risk you are prepared to take Very little risk Low risk Low risk High risk Higher risk How long you want to remain invested Around one year Three or longer Three or longer Five Once you have determined your risk profile and investment goal, you can select a portfolio you feel is most appropriate for your needs. Below are the Alexander Forbes Investments unit trust portfolios that are available in the tax-free saving account Examples of Alexander Forbes Investments unit trusts available in the tax-free savings account that may meet your needs Type of risk AFInvestments Superior Yield Unit Trust Class T Passive Unit Real Return Focus Unit Passive Unit Institutional Equity Unit Property Equity Unit Example of unit trust portfolio How long you should remain invested At least one year At least three At least three At least five Investment objective Aims to: * provide income and targets a return above that of money-market portfolios * preserve capital and maintain high liquidity. Aims to generate moderate capital growth over the medium term, by investing in a combination of asset classes. Aims to achieve above inflation returns of 4% ahead of headline CPI after tax, on a threeyear rolling basis, at a low risk, under any market conditions. Aims to generate capital growth over the long term, through investing in a combination of asset classes. Aims to achieve long-term, inflationbeating returns through exposure to equities. The portfolio aims to achieve capital growth, while at the same time providing a relatively stable income stream. Investment Fee 0.40 p.a 0.50 p.a 1.2 p.a 0.50 p.a 1.0 p.a 1.2 p.a Detailed fees are available in the Minimum Disclosure Document/s (www.alexanderforbesinvestments.co.za/download-centre/ Fund-Fact-Sheets) for each portfolio, as well as on the schedule of fees, charges and maximum commissions, which is available on request from us, the manager, or on our website (www.alexanderforbesinvestments.co.za/products-services/individual- Investments-Unit-Trust-Fees).
Important information about your investment This section contains important information that you must know about your investment in terms of the Collective Investment Schemes Control Act (CISCA) and Financial Advisory and Intermediary Services Act (FAIS). This information is not advice, as defined in FAIS. Please speak to your financial adviser if you have any questions about this information or about your investment. About the investment Unit trust investments (called collective investment schemes) are generally medium-term to long-term investments, so the longer you remain in the unit trust, the greater the chance of your investment achieving its specific investment goal. Your investment can go down or up 1. The value of units (known as participatory interests) in a unit trust may go down as well as up. 2. The way that a unit trust has performed in the past is not necessarily a guide to how it will perform in the future. 3. The capital value and investment returns of your unit trust may go down, as well as up. The manager does not provide any guarantees about either the capital or the returns of a unit trust. 4. Exchange rates may go up and down (referred to as fluctuation). This can cause the value of foreign investments to go up or down. Risks of investing in unit trusts that invest in foreign securities 1. Investing in a currency other than South African Rand might expose you to foreign-exchange risk. 2. Foreign securities (for example, bonds, shares, property, etc.) might have extra risk, depending on the specific risks that affect that country. Examples of these risks are: Liquidity constraints (converting an asset into cash) Repatriation of funds (bringing the money back into South Africa) Macroeconomic risks (the economic problems of a specific country) Political risks Foreign-exchange risks, like the risk of an investment s value changing due to changes in currency exchange rates Tax risks, like new taxes introduced in other countries, that are out of our hands Settlement risks, like a counterparty does not deliver on a share Market information specific to a country, might not be available Unit prices and portfolio values 1. The portfolio is traded at ruling prices. 2. We use forward pricing. This means we buy and sell the units at the net asset value (NAV) of the units at the pricing time. 3. Prices are published daily in the business section of the The Star newspaper. They are also available on the website www.alexanderforbesinvestments.co.za/download-centre/ Daily-Unit-Prices. 4. We value all unit trusts at the end of every business day, using the latest available prices at close of business. 5. The cut-off time for giving us instructions to buy or sell units is 13h00 (1pm). Fees and charges for this investment 1. Unit trusts can be made up of different fee classes, based on specific criteria. Each class of units within the portfolio has different fees and charges. The class that is relevant to you is set out on the portfolio s Minimum Disclosure Document (or fact sheet). 2. A fund of funds, for example, the Stable Fund of Funds, is a portfolio that invests in portfolios of collective investment schemes. These portfolios charge their own fees. This can mean higher fees for the fund of funds. 3. The yield of the Superior Yield Unit Trust is historic. We calculate it quarterly. 4. Alexander Forbes Investments does not charge a performance fee for this investment. 5. A schedule of fees, other charges and maximum commissions is available on request from the manager and on the website www.alexanderforbesinvestments.co.za/ Products-Services/Individual-Investments-Unit-Trust-Fees). About managing the portfolio 1. The portfolio may borrow up to 10% of the unit trust s market value to bridge insufficient liquidity. 2. The portfolio can lend scrip, if the necessary approval has been obtained. 3. The manager has the right to close the Performer Managed Unit Trust and the Stable Fund of Funds to new investors to manage them more efficiently, in accordance with their mandates. 4. You can get more information about the proposed investment free of charge from brochures, application forms, the annual report and any half-yearly report. These are available on the website www.alexanderforbesinvestments.co.za/products- Services/Individual-Investments-Unit- Trust-Forms. Complaints and conflicts of interest The complaints policy and procedure, and the conflicts of interest management policy are available on our website www. alexanderforbesinvestments.co.za/risk-compliance/corporate- Governance. Associates of the manager may be invested within certain portfolios. You can get details from the manager. The entities involved in this investment The manager: Unit Trusts Limited, Registration no. 2001/015776/06, Telephone + 27 11 505 6000, Physical address 115 West Street, Sandown, 2196, Email afinvestments@aforbes.co.za, Website www.alexanderforbesinvestments.co.za. The trustee: FirstRand Bank acting through Rand Merchant Bank Custody & Trustee Services, Telephone +27 (0) 87 736 1732, Physical address First Floor, No. 3 First Place, Bank City, Cnr Jeppe & Simmonds Streets, Johannesburg, 2000. *The trustee is independent of the investment manager. It acts as the custodian of the portfolios assets and ensures that the unit trust is managed according to the guidelines laid out in the deed, to minimise the risk of mismanagement by the manager. The manager and the trustee are registered and approved under the Collective Investment Schemes Control Act 45 of 2002. The investment manager: Alexander Forbes Investments Limited, Registration no. 1997/000595/06, is an authorised Financial Services Provider (FSP 711) under the Financial Advisory and Intermediary Services Act 37 of 2002, to act in the capacity as an investment manager. The address is the same as the manager s. There may be representatives of AF Investments Limited acting under supervision. Our holding company, Alexander Forbes Limited, is a member of the Association for Savings and Investment South Africa (ASISA). Alexander Forbes Individual Client Administration (AFICA) is a licensed financial services provider (FSP 32494) Written and designed by Alexander Forbes Communications. 9675-RD-TFSA-Portfolio-Guidline-2017-05 Photos: istockphotos.