David and Sarah are determined to see that one year-old Nicholas goes to a private school in his secondary years. They have $2,500 to start their Savings Plan from Sarah’s parents, and hope that with their own monthly savings they can finance his school fees, and possibly have some funds left over for a second honeymoon, or perhaps for Nicholas when he turns 23.
They decide to establish an AUSTOCK Life ChildBuilder Bond. David and Sarah work out that they can afford saving $200 per month, and as they expect their savings capacity will increase in the future, they plan to use the Bond’s 125% add-on feature which allows a payment of 125% of the current contribution.
Their objective is to build their Bond to a certain level, and then begin regular draw-downs to finance Nicholas’ school fees. Given the long investment time-frame, they establish a Bond with a mix of Australian and International share funds.
The aim is to generate at least a 7% p.a. after tax return (net of fees).
By the time Nicholas turns 12, the Bond should accumulate to $137,089.
As this will more than meet their education funding target, David and Sarah plan to stop their Savings Plan and set up ChildBuilder’s Regular Withdrawal Facility as a convenient way to pay for Nicholas’ school fees.
Any money left over after education fees can then vest for Nicholas on his 23rd birthday, to help Nicholas move out of home or as a first home deposit– tax paid.
Or, can be used by David and Sarah for their own purposes – tax paid.
Richard Atkinson
Head of IFA Product and Relationships
Austock Life Limited
t: (03) 8601 2095
m: 0417 541 897
e: RAtkinson@austock.com
www.austock.com