Dev Raga Personal Finance 518 investment bonds (with Generation Life CEO, Felipe Araujo)
Apr 29, 2025
Felipe Araujo, CEO of Generation Life and builder of taxâefficient investment bond solutions, explains how investment bonds work and who they suit. He covers tax treatment, the 10âyear rule, the 125% contribution limit, asset protection and estate transfer features. Short, clear takes on fees, investment menus, withdrawal rules and safeguards if a life company fails.
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Life Company Can Offset Capital Losses Against Income
- Generation Life pays tax quarterly on distributed income and realized gains and does not tax unrealized capital gains inside the bond.
- The company operates from a revenue account allowing capital losses to offset income, improving after-tax returns.
After Tax Returns Often Far Lower Than 30%
- Although statutory tax is 30%, Generation Life's tax optimisation typically yields effective tax rates around 10%â15% on after-tax returns.
- This optimization uses franking credit matching and trading strategies across ~$4bn funds under management.
Hold Ten Years And Watch The 125% Contribution Rule
- Hold an investment bond for at least 10 years to ensure withdrawals do not form part of your personal taxable income.
- Remember the 125% rule limits annual contributions relative to the first policy year to encourage long-term saving.