Empowering the Future: Tax-Paid Investing for Generational Wealth

Our next speaker is Mr. Damian Mottle, Group Executive, Sales Distribution from Futurity Investment Group.

For the past two decades, Damian has been in leadership positions in both emerging and well-established markets across Asia and Australia.

Futurity education bonds are designed to tax-effectively save and invest to accumulate funding for education purpose objectives.

The flexible structure gives full control and access to funds at any time, both for making education benefit claims and withdrawals for any purpose, including estate planning.

Damien would like to discuss how to empower the future using taxpayer investment for generational wealth.

Welcome, Damien Otto.

Thank you, and thank you for those that are joining this session on that.

So with that topic and with this covering slide, your wealth and your family, the question is around fertility investment group and what is it exactly we're gonna touch upon.

What we're gonna touch upon is education bonds as an investment vehicle, and I'm gonna unpack

the word education and the word bond.

So challenging the audience today to know that this strategy is more than just education or a bond.

So let's jump into it.

I want to cover some key points around what an education bond is.

There might be some myths or some thoughts of what it could be or couldn't be.

So I want to take away from the audience, it's not a corporate or government bond for those that know what those vehicles are.

An education bond provides for those that are with us today, the investors, a versatility option, a tax effective strategy, but also emerging into intergenerational wealth and estate planning features.

So you can see already I'm starting to touch upon a few investment ideas beyond just education or a bond vehicle.

Education bonds are a non super tax paid and often tax free investment and saving strategy.

So I'm not gonna walk away today knowing that this is not an investment.

This is an investment strategy.

It's just that we're gonna go a little wider than just what returns or what fund we would use to do this.

And more importantly, talk about other life events.

So the audience might know of family trust as a vehicle to use to invest as an owner.

So I'll ask the audience today to think about an education bond as a tax effective family trust, but not a trust itself without the compliance cost or the 30 June tax returns.

But still a vehicle to accumulate and distribute wealth for any purpose.

It's just that it's got some unique tax advantages when structured with an education beneficiary.

or beneficiaries for that perspective.

And just from a regulatory point of view, it's important still to know that the vehicle itself, an education bond, whilst only owned by friendly societies, it is under the Life Act and is a subject to supervision by APRA.

So there's still that regulatory framework around maturity and education bonds.

So I just want to now talk about some core features and strategies around education bonds

For those today who might be familiar with some individual characteristics I'm going to talk about, I'm just going to move all those characteristics under an education bond, but advantageous to an investor.

So an education bond can act in investment strategy will like estate planning.

The features of education bonds

Whilst they sit outside the wheel themselves and cannot be contested like a wheel, it can be treated like a wheel.

You can set it up, invest, but also pass on wealth to loved ones that you nominate as a beneficiary.

It's a vehicle that you can still use to save or put lump sum monies into.

It's not just a set and forget strategy.

It's also an investment strategy, again, that even whether you're the investor, which in this term is known as a bond owner or bond owners, even on the event of your passing, this strategy can be used to future activate transfer dates to beneficiaries beyond possibly the death of the bond owner.

I can nominate a time that it can tax effectively go to a beneficiary.

There are avenues for tax-free access, again, either built around proceeds going at the end of an education bond investment, proceeds going upon death.

There are tax strategies in an environment that beneficiaries can receive the money tax-free.

And finally on the core bits, tax paid investing.

And an education bond is a tax paid investing vehicle, meaning the product provider funds the tax on the earnings.

The bond owner doesn't lodge a tax file number.

And the main event doesn't pay tax on a 30 June annual base on any earnings.

Quickly though, the benefits of education bonds that capture these and more

I mentioned the ability to use this for education.

When an education expense is processed through an education bond, there is a unique 30% education tax benefit.

I'm not going to go under the hood too much on that today, but in simple, think of it as a way that when you as a bond owner do process an education claim expense for one of your beneficiaries, whether it be a minor or an adult,

There is a 30% education tax benefit coming back from the ATO into the education bond.

One of the unique features of education bonds is the access to capital, both in terms of putting more capital in, but more importantly,

the flexibility to take capital out for any purpose at any time.

So that flexibility for an investor to know I'm investing, but at times when I need it, I can get that money out because I as the bond owner or bond owners are in control.

That does not trigger a tax event.

Most important strategy.

Also the ability to use an education bond for more than just one solution.

When we talk about beneficiaries, whether it be children,

or extended families to use an education bond, just one strategy, and put multiple beneficiaries under that.

So you can disperse monies to multiple people or use it for multiple beneficiaries rather than setting up individual strategies.

And I quickly touched upon before the event of death, the ability for an education bond to continue beyond the event of death

through a bond guardian feature, that individual overseeing the bond owner's instructions in fulfilling their wishes.

Kind of control beyond the grave because the bond owner still is determining how that money is going to be invested and used.

The bond guardian is only seeing those features.

So that's the kind of mechanisms beyond just the investment that you can use this for in terms of that generational wealth transfer, but in a tax effective environment.

So you're thinking, am I one of those people as an investor who would use an education bond?

Obviously it makes sense that an education bond could be used for those planning to fund the education for present or future children and still access that tax benefit.

It could be for grandparents to help families.

I mean, in today's cost of living and wanting to start a legacy beyond the,

the death of a grandparent or so, this is a way to start a legacy and help families around cost of living pressures, but also an investment to the future, being their grandchildren, again, in a tax effective way.

Because the vehicles are tax paid investing structure, certainly investors on a high marginal tax rate would benefit from this.

But also we've seen recent and heard recent noises around superannuation.

So again, an alternative to superannuation planning.

because of that flexibility.

And there are some benefits for those that inherited wealth and want to use it for some tax-effective family education funding, but again, accumulation of that wealth that has sadly been received from an inheritance perspective.

So there's some of the personas.

So you're thinking of a persona, so how does this work?

If you're a parent, which on part of the slide shows a parent, John and Mary, or grandparents in this case, David and Margaret,

And then that sits below that is the education bond.

And then those beneficiaries that I touched upon, but multiple, whether they are born yet or in the future, the ability to add future beneficiaries to an investment strategy that's already started.

So we put some ideas on this slide around how can I use it beyond just the family scenario?

Because unfortunately in life, there are other events that take place, whether it be split families as we've touched upon there, divorce, family breakups.

whether it be an alternative to wills because of the tax effective structure, whether it just be an extending family and I want to solve solutions for my extended family.

I want to invest, I want to accumulate, but I want to distribute in an effective way.

I won't take away that there is still an investment menu.

Investors, you are still looking for whether I'm a high growth appetite, whether I'm balanced, I'm looking for responsible investing.

An education bond sits behind it is a master-like investment menu where you as the investor get the option to align your risk appetite of investments against an investment fund that suits your profile as well.

So we've got a range.

of investments that sits behind the education bond.

So if I can just start to close off about the education bond and just remind investors today, the structure benefits beyond obviously maximising an investment strategy, is that control, the control of an education bond, most alive, but as I touched upon before, even beyond the grave.

a great feature for passing on wealth.

I touched upon too the ability not to have a tax file number, most likely no tax reporting depending on how you access the funds, and also that flexibility to add future beneficiaries, whether adults or minors, into a bond without restarting it again.

The investment menu I just pointed upon before, the education bond under maturity has currently 32 investment options, but as important as the market's changed and you want to change your risk appetite from maybe high growth to balance, you can do that without creating a CGT event.

There is peace of mind as the investment if I am using it for education funding, if I am seeking to fund, but also pass on wealth to my future family,

And more importantly, I've still got access to the funds at any time for any purpose without possibly creating a CDT event.

So in my time of presenting today, I just wanted to explore the education bond

and more than just education savings plan, more than just a vehicle to create earnings, but the flexibility and how I set that up for myself as an investor or for the family that you're considering to pass on wealth.

And I thought I'd just end with a couple stats just to share with the audience.

Education itself, when I talk about that portion of presenting and using this for education funding,

through our research reminds us, whether it's government schooling or private or Catholic, education is not getting any cheaper over that period.

So when you're looking to support your families, this is a true cost that's been faced amongst the cost of living pressures that already are in front of people.

And I find it interesting, Sat, just recently, as much as there's cost of living pressures there, families are starting to tend towards an increase in sending children to Catholic or independent schooling,

And in the years 21, 22, there was actually a small drop off in students attending government.

So there is an importance around education funding and education learning among that perspective.

And just that wealth point, we are all living longer, but that means as we live longer and we pass on wealth,

due to the economic times that have eventuated over past years, the persona of people that are receiving that wealth as parents or grandparents with a long life still to face.

So there is wealth certainly sitting in the market.

It's a question to the investors.

What do I want to do with it now?

Or where do I want to pass that wealth on or use it in a tax effective manner?

So I'm going to close there as a presentation, obviously putting up a disclaimer to note everyone.

but I encourage those to jump on the website of www.fortunityinvest.com to explore the education bond for yourselves as an investment strategy going forward.

Thank you.

Thank you, Damian.

You are very knowledgeable on the topic of education bonds.

And I have one question for you.

It's a very technical question in a sense.

Superannuation are often considered the primary vehicle for investors and to support their retirement income.

Now with both the total balance cap and other possible changes to superannuation in terms of the $3 million balance and additional proposed taxes,

Are education bonds an alternative strategy?

Yeah, it's probably a key word to use there, alternative.

I mean, nothing beats super in the context of a vehicle for future retirement and funding of that retirement and then in a tax effective manner.

But to your point, we are seeing some uncertainty around superannuation being touched on a regular basis.

So that regulatory change does create uncertainty.

So where the alternative education bonds can sit is where I touched upon that flexibility.

Flexibility to continue to put money in,

flexibility to take money out in a non-tax manner for any purpose.

So complementing the super whilst investing is that vehicle to invest, get a return, but get access to monies or pass on that wealth.

And I'll just touch upon estate planning as an additional feature.

Maybe sometimes that superannuation certainly can nominate a beneficiary, an education bond can nominate obviously

greater beneficiaries, it can be a family trust, it can be a charitable organisation, so just that estate planning as well.

So I'll close off by just saying flexibility, estate planning, and with some regulatory changes, uncertainty, and education bonks, and just give that good alternative to having control, flexibility, but still an investment strategy.

And thank you, Damon.

And obviously, just to emphasize, this is not financial advice or financial product advice.

So please seek your financial advisors or professional who can provide you advice to consider a personal and financial situation before you make a decision.

Now, good to see you, Damon.

Thank you.

Take care of yourself.