Investment (Onshore) Bonds, Offshore Bonds, and DGTs - How to schedule the future purchase of a Bond, or Discounted Gift Trust

Onshore and Offshore Bonds, and discounted gift trusts (DGTs) work differently than other types of investments. Within the software, the initial investment into a new Bond, or DGT is entered as a 'purchase' (rather than a 'contribution'). Withdrawals can be taken, and the asset can be fully encashed at some later time. It is now possible to 'top-up' an existing Investment Bond.

1. To schedule the future purchase of a Bond go to the Investments screen

2. In the Type dropdown, select either Onshore Bond or Offshore Bond, or one of the two types of Discounted Gift Trust

3. Select New? – Yes.

4. Enter the Purchase Value.

5. In the People panel, designate the owner(s) of the new investment, as appropriate.

6. Expand Advanced Settings and select the Growth & Yield panel. Set the growth rate of the bond, as appropriate. The investment can be grown using a fixed rate of growth, or at a rate derived from an Asset Allocation. Asset allocation will be used only if the Use Asset Allocation check box is ticked.

7. If this is a future bond purchase, and the purchase price is not to be inflated (i.e. it is a future amount), select Future Value.

7. Other settings, under Advanced Settings (e.g. Life Fund Segments, Insurance Payout, etc.), are outlined in more detail here >>>

8. Go to the Time panel, on the right side of the screen. Select two events on the panel's Events tab to indicate when the bond will be purchased and when eventually it will be liquidated.

-  Select a start event to indicate when the bond will be purchased (e.g. Retirement, the year of the tax-free cash inflow). A green dot will appear next to this event.

-  Select an end event to indicate when the bond will be liquidated (i.e. fully encashed). This might be Mortality or an earlier event might be selected. A red dot will appear next to the end event.

If you don't already have events on the timeline that are positioned appropriately to be used as start or end events, new ones can be easily added by clicking the New Event button, located in the bottom-right corner or the Time panel, Event tab.

A one-off purchase expense will be created for the Bond, or DGT in the year of the selected (green dot) event. The purchase should be visible on the Let's See chart, reflected in the position of the need line.

To view the details of the purchase, click the bar/year of the chart in which the purchase is scheduled.

Click Detailed Info. The chart details panel will display. The purchase will be shown as an expense, via the Expenses tab.

The new bond, or DGT will also be shown and tracked, in future years, via the Investments tab.

Further Reading: Have the software calculate a tax-optimal withdrawal strategy for a bond

 

Last updated 19 October 2015, Release 4.0.23