Reinvest - Use a lump sum inflow to purchase an onshore / offshore life fund or discounted gift trust

Reinvesting Lump Sum Inflows

If lump sum inflows, such as tax free cash from a crystallised money purchase or an inheritance, are not spent or set to be saved, they will be deposited to the owner’s default cash account (e.g. John's Cash) where the funds will remain on deposit until needed to fulfil expenses. In many cases, these funds will be the first source of supplemental retirement income above any existing pensions, state benefits, and other income sources.

 

Use a lump sum inflow to purchase an onshore / offshore life fund (bond) or discounted gift trust (DGT)

In Voyant, bonds are purchased, withdrawals can be made from them and they will be fully enchashed at some point. The software does not perform the topping up of existing bonds.

1. To schedule the future purchase of a bond or a DGT go to the Investments screen.

2. In the Type dropdown, select either Onshore Life Fund or Offshore Life Fund or one of the two types of discounted gift trusts.

3. Select New? - Yes and enter the Purchase Value.

4. New? - Select Yes.

5. Enter the Purchase Value, that is to say, the amount of tax free cash you want to invest initially into the bond. Presumably this will the a future amount - i.e. not inflated.

6. Expand the Growth & Yield panel. Set the growth rate of the bond, if necessary.

Note: The bond can be grown using a fixed 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. The asset allocation could then be set or loaded separately on the Asset Allocation panel

7. If the purchase price you entered is not to be inflated (i.e. is a future amount), select Future Value.

8. Set the Life Fund Segments, Insurance Payout, etc.

9. Go to the Time panel on the right side of the screen.

10. Select two events on the panel's Event 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.

11. Click Add to save your changes. 

 

 

Related Topics

Is surplus income assumed spent or saved?

What happens to a lump sum inflow if it is not spent or reinvested? How can they be reallocated?

Life Funds (Bonds) and DGTs - How to schedule the future purchase of an onshore or offshore life fund or discounted gift trust

Discounted Gift Trust - How to enter

 

Other possible ways to use lump sum inflows proactively within a plan include: 

Transfer (deposit) a lump sum inflow into a savings account, investment or money purchase

Use a lump sum inflow to purchase a property or other asset

Use a lump sum inflow to pay off a debt

Use a lump sum inflow to pay down a debt

 

Further Reading

Cash Flow Basics - An introduction to the basics of cash flow in Voyant