Have You Signed Up For The Government's Perpetual Pay-Cheque Program?

Written by Julie Brownlee on September 9th, 2016

Have You Signed Up For The Government's Perpetual Pay-Cheque Program?

Right now the government is waiting to pay you.

You don’t need any under-the-table deals to claim your pay-cheques…

You definitely don’t need to be part of the wealthy elite for this to happen…

And you certainly don’t need to be a Gupta either!

All you need to do is set a few things in motion and then tell the government where to send your money.

It’s one of the safest and simplest low-risk techniques I’ve ever come across, and you can even sign up at your local post office!

I call it The Government’s Perpetual Paycheque Program.

You decide how big your pay-cheques are, how often you receive them, and no matter what the stock market does you’ll always get paid!

And if you get your name down, you could even get the government to pay you a hefty R230,000!

Want to find out more?


BONUS: Get your hands on my low-risk bond strategy that you can use to get the government to pay you R230,000! It all comes down to the government's perpetual pay-cheque programme, which I've outlined step-by-step in this FREE guide: 

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Where To Find Safe, Low Risk Returns The Easy Way


If you’re seeking an income strategy, like some do for retirement, one important factor to bear in mind is risk.

High risk strategies come with a price - That is, they might not deliver when you want them to, when you need it.

For example, investing in shares for dividend income.

If there’s a sudden stock market crash and the global economy enters a depression just before you retire, your income is at risk.

So this is why it’s prudent to include a low risk income strategy in your retirement planning.

A popular conservative investment option is bonds.

Bonds tend to be low risk, especially when you opt for government bonds.

And that’s precisely why they’re the bedrock for this perpetual income strategy.

Just how safe is the income you’d derive from Government bonds?

Think of it this way, the government would have to go bust for you not to receive the interest income!

Which is why we’re going to use government bonds to build this income strategy.

So what is this perpetual pay-cheque strategy?

And how does it work?

It all comes down to something called a bond ladder…



Bond Ladders: An Income Strategy To Boost Your Retirement Pot


This strategy involves using bonds to produce an income.

You can use different fixed-interest securities to achieve this, but we’ll stick with government bonds as they carry the lowest level of risk.

By creating a ladder with bonds, there are a number of benefits.

These include:

  • Reducing the risks associated with interest rates; and
  • Increasing liquidity.

If you include other fixed-income securities, following a bond ladder strategy has the advantage of diversifying the credit risk you take on.


How Exactly Does A Bond Ladder Work?


Before looking at how the strategy works, let’s go through what a bond is first.

When you buy a bond, you’re essentially lending the government, or a corporation, money for a specific length of time.

In return for this loan, you’ll receive a fixed interest rate over the term.

This means that you know from the outset exactly how much you’re going to get back.

At the end of the term, you’ll also receive back your initial investment.

By using a bond ladder strategy, you can use these benefits of investing in bonds to produce an income for as long as you want it to.

You’re essentially building a portfolio using bonds.

The strategy gets its name from the way you periodically space out your bond purchases. The different maturities of the bonds account for a different ‘rung’ on your ‘ladder’.

Think of it like this, if you take out a 10-year bond, you’ll get paid out in 10 years.

Now, if you take out a 10-year bond every year for the next 10 years, that means from year 11 onwards you’ll get paid your original amount plus interest paid out every year for the next decade.

The idea is to then reinvest the pay-out every time you receive one in order to compound your returns.

You decide how much you want to put in, and for what period of time as well.


What You Need To Do Before Putting Your Bond Ladder Strategy To Work


What’s Your Time Scale?

Your bond ladder strategy will depend on your current age and when you plan to retire.

The younger you are when you start, the more rungs on your ladder.

As with all retirement strategies, the earlier you start, the better the results over the long run.

Which Bonds Will You Buy?

You need to work out which bonds you’re going to use to build your ladder with.

Here are two great, but more importantly, safe options to consider:

Option 1: Government Retail Bonds

Using government retail savings bonds is by far the easiest method.

You have full control over when you buy and there are no fees to pay.

It’s pretty simple to do, just visit the RSA Retail Bonds website.

Heck, you could even buy retail savings bonds at your local Pick ‘n Pay or at the Post Office.

If you choose to go for the online option, you can register, buy bonds and manage your account.

Plus, you can invest with as little as R1,000.

You can purchase two different types of bonds:

  1. Fixed rate bonds, with terms of one, two and five years; or
  2. Inflation-linked bonds, with terms of three, five and ten years.

Opting for the longest term bond is likely to be the best option as it means more favourable interest rates and less maintenance for you when it comes to reinvesting your income.

This means opting for the inflation-linked ten year bond.

Plus, you’ll have the comfort of knowing that your returns will beat inflation.

If you go with fixed-rate bonds, you can opt to reinvest your interest payments if you wish, compounding your returns.

And don’t forget that as SARS classes the income you receive from bonds as interest, you don’t have to pay tax on sums up to R23,800 per year if you’re under 65, or R34,500 if you’re over 65!

Option 2: Government And Corporate Bonds

If you decide that you want to invest in government bonds or corporate bonds for your strategy, you’ll have to use the services of a stockbroker.

This does give you more options, but there are disadvantages to these types of bonds:

  • You have to pay your stockbroker for their services
  • You can’t manage it yourself
  • The amount you need to invest tends to be quite substantial in comparison to what you need to invest in government retail savings bonds

Let’s simplify things a little and take a look at a bond ladder in action with an example…


A Bond Ladder Strategy At Work


Say you’re 50 years old and you plan on retiring at 65.

You decide that you’ll invest R10,000 a year into your bond ladder. In other words, your ladder will have 15 rungs.

This means that for the next 15 years, you’ll buy R10,000 worth of ten year bonds each year.

When the bonds begin to mature, when you reach 60, you also reinvest the proceeds to buy more bonds.

Once you reach 65 and retire, you stop investing R10,000 and only invest the returns from your previous investments.

After this, the strategy is essentially paying for itself and you can reap the rewards in the form of income.

So how much can this strategy pay out?

Interest rates will fluctuate over time, but let’s assume it averages out at 10% per year for the purpose of our example.

So for every bond you buy, you generate R10,000 in income over the term of the bond.

By the age of 65, you’ll have made R60,000 in income. By the age of 75, R230,000.

And then it’s down to your reinvested funds to start working.

The longer you stick to the strategy, the bigger the overall returns will be.


How To Guarantee A Return And ALWAYS Beat Inflation!


Bond laddering, despite its odd sounding name, is a safe, easy way to invest for income!

Once you get started, it’s really easy to keep it going too.

Just don’t forget to reinvest your income from interest payments into new bonds before you retire.

If you go the government retail saving bonds route, it’s so easy to do.

And you don’t have fees to pay.

The only thing you might have to cough up for is tax on your interest if you exceed the annual exclusions.

But either way you’re guaranteed a return (what investment can claim that!?), not to mention you’ll always beat inflation.

You can also keep your bond ladder for as long as you want, and you could consider opting for shorter maturity bonds when you get older.

Using government bonds means this is an extremely low-risk strategy that’ll pay off handsomely over the years ahead!

Until then, here’s to profitable investing. 

Julie Brownlee | The Money Lab

Julie Brownlee
Editorial Contributor
The Money Lab

PS: If you're looking to sign up to the government's perpetual pay-cheque programme, then I have just the FREE guide you need to do so!

In it, I show you the low-risk income approach that you can use to get the government to pay you R230,000!

All you need to do is tell me where to send it!

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