10Invest is a simple, online, low-cost investment bond that offers tax effectiveness not available through traditional savings and investment products.
10Invest is all about establishing a long-term savings plan. With regular contributions, your investment could benefit from compounding interest to create opportunities for the future, in a tax effective way.
Use time to your advantage
Start planning now – a lot can happen in 10 years.
Kim is a single parent with an 8 year-old son, Linh
Learn moreKim is a single parent with an 8 year-old son, Linh.
Kim’s son Linh has settled well into Primary School and Kim realises he’s growing up fast. She wants to be able to provide him with a nest egg when he turns 18. She’s hoping it will help him enjoy a gap year travelling which is something she did herself.
Kim invests an initial $10,000 and each year after, uses her annual tax return to top up Linh’s investment, which is around $2,000 per year.
At the 10-year mark, the savings have grown to $38,939. And because it’s been invested for 10 years, Linh is able to withdraw the money as a lump sum, or use it for a regular income stream, with no personal income tax to pay.
Assumes 5% average annual return after fees and tax, plus the effects of compounding earnings. The balance in first year includes investment earnings.
Lewis inherits money and wants to save for his son’s future – 20 years invested
Learn moreLewis recently inherited a sum of money from his grandmother. He values having his own “bricks and mortar” home and understands that it could be tough for his son Zack to own his first home.
At age 25 when Zack is ready to set out on his own, Lewis can provide the help he promised with $173,412.. He contributed $100 a month to the policy after investing the $50K he inherited. And because he invested for over 10 years, Zack can withdraw his money as a lump sum, or a regular income stream, with no personal income tax to pay.
All the costs explained
Learn moreEvery parent wants the best possible education for their kids, but there’s a huge difference in cost between sending your kids to a government, religious or independent school.
Understanding what each option costs is the first step in making the right choice for you. It’s a good idea to think through your schooling options right from birth, especially if you need to save up for a private school education, as it will help you to work out how much you need to set aside.
Continue readingWhen you deposit your money into 10Invest, we invest it in the option(s) you’ve selected.
You can invest as much as you like in the first year, then maximise your savings using the 125% contribution amount thereafter.
Along the way we pay tax to the ATO on your investment earnings at 30%— the capped tax rate within the bond, so you don’t have to include it in your personal tax return whilst you’re invested.
If you keep your investment bond for 10 years, you can withdraw with no personal income tax to pay on the interest earned.
Fees and other costs
We regularly monitor fund manager’s and our fees and other costs, and we will update you of any changes via our website australianunity.com.au/wealth
Further information
If you have any questions, please contact the Investor Services team on 1300 1300 38 or email enquiries@australianunity.com.au, or the Adviser Services team on 1300 133 285 or email investmentbonds@australianunity.com.au.
Visit our website australianunity.com.au/wealth for any further fee changes to the investment options on the 10Invest investment menu.
What can an investment bond be used for?
Possible uses for an investment bond include saving for something significant such as home renovations, holidays, retirement income, a complement to your superannuation (if you’re capped out), a child’s future or for any long-term financial goals.
What is the 10-year rule?
The 10-year provision is a key part of the unique advantage that investment bonds offer over other traditional savings products.
When you hold an investment bond for 10 years, you can withdraw your money with no personal income tax to pay on the interest earned.
What is the 125% contribution rule?
You can make additional contributions over the life of your investment in 10Invest. During the first year there is no limit to the amount you can contribute. The value of putting as much in as possible during the first year is that you can contribute more in subsequent years.
Each following year, your contribution should not exceed 125% of the previous year, because if you do, the start date of the 10-year rule will reset.
Put simply each year you can make the same contribution you did the previous year plus an additional 25%. We will send you reminders/alerts when you are likely to trigger the 125% rule.
This will assist you to keep on top of your additional contributions. Setting up a regular savings plan with ongoing contributions could help you manage this.
How can the tax effectiveness be affected?
• If you make a withdrawal within the first 10 years of your policy
• If you contribute more than 125% of the previous year’s contributions, you will reset the 10-year period of your investment
• If you don’t make any contributions in a particular year, but then make contributions in the following year, then you will reset the 10-year period for your investment
How is my money invested with 10Invest?
You can select up to six options in Australian Unity’s 10Invest investment bond. Once you’ve invested, your money is pooled with other investors and professionally managed by a fund manager on your behalf.
Who can invest with 10Invest?
10Invest has ownership options for individuals, joint investors and Trusts^. You can invest in your own bond or do so with a partner, friend, or family member.
^Trusts will need to apply via a paper-based application form at this time.
How much do I need to start with 10Invest?
A minimum deposit of $1,000 is required to be paid via Direct Debit. Whilst applying you can also choose to add a Regular Savings Plan, with a minimum of $50 per investment option to be paid on a regular basis.
What do I need to apply and be verified for 10Invest?
Make sure you are eligible:
• You are at least 16 years old
• An Australian resident
To make your application as easy and quick as possible, make sure you have ready:
• Your latest contact details
• A combination of a current passport, driver's license, Medicare Card or Birth Certificate to pass the online ID process
• Bank Details (BSB & Account number)
And most importantly make sure you read and understand the Product Disclosure Statement (PDS).
What investment option is right for me?
As all investments carry risk, you should read all PDS to ensure you are choosing an investment option that is right for your risk appetite.
Those who are comfortable with only a low level of risk, should consider conservative options, whereas investors less concerned by short term volatility and wanting to take on more risk, might invest predominately in growth options.
Can I invest in more than one option?
You can invest in one, all, or a mixture of our six investment options, with a range of risk profiles to suit your risk tolerance and investment goals.
The minimum investment is $1,000 and can be spread over any/all options provided in the PDS.
You can also change your investment options at any time.
Who are all the parties in an investment bond?
• Owner: the person who “owns” the investment bond and makes the important decisions
• Life Insured: Since an investment bond is structured as a life policy, a Life Insured must be nominated. This means that the bond can be redeemed if the Life Insured dies before the ten-year period has expired, with no additional tax payments. The Owner will nominate who this person is in the application form.
• Beneficiaries: These are optional and receive the proceeds of the investment bond should the Life Insured/s pass away.
Why do I need to nominate a Life Insured?
With an investment bond you are required to nominate at least one “Life Insured”, a person whose life is insured under your policy. When this person dies it will trigger the policy to mature. If this occurs your full investment will be paid with no additional tax payments, regardless of whether you have reached the 10-year tax paid status.
The Owner automatically becomes the Life Insured person, at the time of application, unless you nominate a different person.
You can nominate a Life Insured person(s) at any time during your policy. However, if you nominate one or more persons as the Life Insured, the policy will not mature until the last nominated Life Insured person passes away.
Who can be a beneficiary?
An investment bond allows you to pass your investment to nominated beneficiary(s) tax free if you pass away. Beneficiaries can be of any age, non-related, or even a company, trust or charity.
Can I make this investment on behalf of a child?
You can invest on behalf of a child between the ages of 1 to 16 whilst retaining full control of the investment. It can then be transferred to the nominated child between the ages of 10 and 25. You will need to specify this ‘vesting’ age in your application Policies cannot be transferred to a child under the age of 10.
What happens after the vesting age is reached?
Once the nominated date/age has been reached, the policy will automatically convert to the child without incurring any fees or charges.
Importantly, the 10-year rule does not restart, and the original commencement date of the investment continues, ensuring that the 10-year tax concessions are preserved.
If the policy has been transferred to the child during the ages of 10 to 16, any withdrawals and contributions need a parent or guardian’s consent.
Can I change the vesting age for my nominated child?
You can change the vesting age at any time before it occurs. This can be done by contacting our Investor Services team.
How much can I invest each year?
You can invest as much as you would like in your first year.
You can make additional contributions so long as you do not exceed 125% of the contributions made in the previous year. Refer to the 125% contribution rule.
Can I change my regular savings plan?
You can change your regular savings plan at any time. When you change your regular savings plan, it is important to consider the 125% rule which applies to contributions.
When can I withdraw my money?
You can withdraw your money at any time, and for any purpose, however it may affect the tax effectiveness of your investment.
If you make a withdrawal within the first 10 years, you can take advantage of the 30% tax offset rule on the interest earned to reduce your personal income tax. This tax offset is available to counterbalance the tax already paid in your investment bond at 30%.
Should you need to withdraw within 10 years the following tax rules will apply:
|
Withdrawals made |
Tax payable on |
|
8th year or earlier |
All earnings |
|
9th year |
2/3rds of earnings |
|
10th year |
1/3rd earnings |
|
After 10 years |
Nil |
Is there a minimum amount I can withdraw?
The minimum amount you can withdraw from your investment is $500 however you must maintain a minimum account balance of $1,000.
Does personal Capital Gains Tax apply?
No personal Capital Gains Tax is incurred for switching between investment options or when making withdrawals from your investment.
If you make a withdrawal from your bond within the first 10 years (in normal circumstances), your earnings will simply be assessed at your marginal tax rate. You will also receive an automatic tax offset for your personal tax– currently equal to 30% of your assessed amount.
Effectively, you must only pay personal tax (but not CGT). If your marginal tax rate is greater than 30% you will only pay personal tax on the excess.
Does this mean I do not get the 50% CGT discount?
The 50% CGT discount is only available if you are assessed for CGT.
Your realised investment bond growth is not treated as a realised capital gain, under current Australian tax rules.
Does this mean other investments that get the 50% CGT discount are better?
Other investments may generate income and realised capital gains within 12 months even while your investment continues to be held and no withdrawals are made.
In contrast, you may have to pay personal tax on your investment bond the year you make a withdrawal.
But, there will be no personal tax when you withdraw:
• After 10 years (and without triggering the 125% rule).
• At any time – including within 10 years, if the withdrawal is due to:
o Death, accident, serious illness or other disability affecting the person you have nominated as the Life Insured.
o Unforeseen serious financial difficulties affecting you (as bond investor).
• Within 10 years (in normal circumstances):
o If the 30% bond tax offset equals or exceeds your tax.
o None of these special bond tax concessions are available with any other investment.