Yields on investments (dividends and interest) can be set to be reinvested or paid out to your clients annually as a form of income. The option is available to switch the reinvestment of yields on or off at various times in the future using the software’s Step Up / Step Down facility.
When interest and dividends are set to pay out annually, they will be shown as inflows in the Let's See > Cash Flow chart.
Reinvest yield is set as a default in Preferences
From the outset, yields are defaulted to be reinvested or to pay out annually in Preferences. In the Plan Preferences (to the right side of the screen) on the Default Inflation / Growth Rates panel is the default Reinvest Investment Yield setting. When this setting is ticked, investments (e.g. unwrapped investments, ISAs) will be set, at least initially, to have their dividends and interest reinvested. If left unticked, these yields will be paid out to your clients annually. Read more >>
Like most preferences, this default setting can still be changed for the individual investments within a plan. You will find the Reinvest Yield setting for individual investments on the Investments screen, under Advanced Settings > Growth & Yield. Read more >>
The reinvestment of yields can be switched on or off in the future using the Step Up / Step Down panel.
For example, if your client wants to reinvest the dividends paid from his GIA from now until five years before retirement and then thereafter take the dividend as an annual income, they could start the plan with Reinvest Yield ticked.
You would first add an event to the timeline (e.g. "Start taking dividends"), positioning it 5 years prior to your client's Retirement event.
To start taking this dividend, go to the Investments screen, select the investment account in the ledger (to the right side of the screen), and expand Advanced Settings.
Select Step Up / Step Down.
Select the event you added a moment ago - e.g. "Start taking dividends". Note that any event could be added to the timeline and selected to schedule a future step or you could use an existing event, such as Retirement, if it were positioned in the appropriate year of the plan.
Untick the settings that will not be changed in this step.
Leave the check box to the left of Reinvest Yield selected, indicating that this setting will be changed at Retirement.
Select No, indicating that the dividend will pay out to your client annually from retirement onward.
You can schedule multiple steps, if needed, for as long as the investment remains active in the plan.
First Published 14 February 2015, Release 4.1.5