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Hi, I am Willem Verhoef. I am a senior advisor with the 1.618 Group. I am a thorough proponent of investing and planning around saving and building for the future.

I'm a big fan of doing broad-based planning. I spoke about retirement planning previously as one component, obviously the big tax benefits and all the thinking and mechanics around that. But that only goes that far. It's that middle of the timeline planning, which is probably where we spend most of our time. And that is in that five to 10 year or even 20 year bracket, or that planning around pre-retirement - or perhaps a supplement to retirement planning for our high-end clients that have maximised tax deductions on retirement front.

So that vehicle that has provided us with excellent returns and consistency over time is the Capital 200 endowment vehicle offered by Discovery. That has been our shining star from a lump sum perspective. Broad based, but with heavy offshore exposure and built in protection if the markets go down. So, from a general perspective, one that gives people comfort in the safety component to it and having the guaranteed built-in, there's no ongoing management that one needs to do. It's a good, simple, honest, lump sum investment that gives you the exposure you need.

The underlying principle of this is the biggest concern of any investor. First, do I have safety on the bottom end? And second, what is my upside? You can obviously use many bank vehicles with a good safety concern, like a money market or a notice account with a bank. Fantastic. But you are cutting yourself off at the knees from a growth perspective.

So, what Discovery has done in conjunction with BNP Paribas - out of France - is create an option to raise capital and provide investors with off shore exposure in a structured bank issued note. The guys in France need the money and the capital to operate on. We in SA are sitting with high cash values, high cash deposits. But with cash deposits, clients want that safety.

Part of the product is built in as a bottom line protection in that any loss up to a 30% loss at the end of the term will be covered by the Discovery and BNP guarantee in the bottom line. So even if your investment is sitting at a -10, they will feed back that into your full capital payout after the five-year term. And on the upside, the beauty of that is the exact opposite. This vehicle is geared that we literally only need 1% flat-line growth over a five-year term to activate the 200% aspect of the investment.

Effectively, what that entails, we invest R100, our R100 is at R101 at the end of the term. That 200% kick in happens at the end of year 5 and your R100 becomes R200. So that is the upside. And again, couple that with the safety net of should we see a really big market dip or a crash where we end up with a -10 or a -15 as an example, full capital back at the end of the term. Safety and the massive upward potential over the term. If you're really technical about it, that R100 becoming R200 as a flat interest over the term will give you a good and solid 15% compounded rate every year for 5 years, which is absolute magic.

Yet again, this vehicle is magic in that regard because it is housed within an endowment vehicle. The capital 200 per definition is more the fund that we utilise, but it's in the endowment vehicle. Massive benefit of that , and in conjunction with clients with diamond annuity, is that all income tax and capital gains tax happens within the vehicle itself. It's not transferred to the owner or the individual. So that helps us to reduce a client's tax footprint. What we often do from that perspective: You would have clients with big unit trust or money market portfolios where the growth on those is of such a nature that it exceeds your tax deduction. And guys are starting to pay R50 000, R100 000 in income tax just on their investment, and that's throwing money away.

The idea would be to utilise these unit trust funds in a more tax efficient vehicle. The endowment offers tax efficiency as the tax is paid by the institution on the investors behalf before distribution takes place, i.e. before you receive your money.

So you are sitting at a tax bracket of 25, 30, 35, 40, 45 % that is an immediate tax saving of an excess of 15%, which is fantastic. So you work around the tax man, utilise the system available, and you have the structure where once your fees are available, it's all yours. It doesn't need to be declared anywhere, it’s part of your estate, and you can manoeuvre with that pre-retirement, which is a fantastic aspect.

Fee-wise, this is our other big kicker with the CAP 200. The fee structure is extremely low. It is at least 1/3 of what a normal Rand-based one would be. So generally, again, dependent on advice we linked in there and the fee structure that is agreed between the advisor and the client, we generally see a structure of about a 1% per annum total cost all in, which is absolutely fantastic. With the bulk of Rand-based to Rand-dominated endowments running over 2, 2.5, 3, in some instances, 5%. This is fantastic in that it is really low. It's attributed over the period of the investment. So what we have is a tax efficient, low cost investment with capital protection and an unlimited up side.