This is the amount allocated to your savings account based on what you pay in. This product includes incentives for you to pay in higher amounts on a regular basis, which are reflected in the allocation rates – i.e. an allocation rate of 105% means that you receive a 5% bonus, every time you pay into your savings account, which is literally an increase in the amount added to your savings plan every time you pay in. So in the case of a 5% bonus rate, if you pay in $2,000 per month to your savings plan, you will have an extra $100 (5%) added to your account – so a total of $2,100 added to your savings – each month.
The allocation rate bonuses increase on a sliding scale in line with the amount you save each month/year (all numbers applicable in USD, EUR, and GBP), as follows:
100 – 149 per month (1,200 – 1,799 per year): 100% allocation rate (what you pay in)
150 – 299 per month (1,800 – 3,599 per year): 101% allocation rate (what you pay in, plus 1%)
300 – 449 per month (3,600 – 5,399 per year): 102% allocation rate (what you pay in, plus 2%)
450 – 599 per month (5,400 – 7,199 per year): 103% allocation rate (what you pay in, plus 3%)
600 – 1,124 per month (7,200 – 13,499 per year): 104% allocation rate (what you pay in, plus 4%)
1,125 or more per month (13,500+ per year): 105% allocation rate (what you pay in, plus 5%)
Despite the obvious advantages in saving more each month, always make sure that the amount you choose is affordable for you on a month-to-month basis. There is no point over-committing yourself, just to get an extra bonus – this is a great product without the bonus, the bonus is a nice thing to have but is not essential to make your financial dreams come true. If you find yourself thinking of a monthly amount just below the amount needed to get an extra bonus, have a think about if you can afford to add a tiny bit more each month – even an extra 1% makes a big difference over time, once the investment returns on that extra 1% are compounded over time. But don’t overstretch yourself or compromise the rest of your financial planning – stay realistic, build a solid financial plan which maximises the benefits you can receive, without compromising other areas of your finances. The most important thing is what you can comfortably afford to add to your savings, take the bonuses for what they are – a bonus. They’re great, but not worth compromising your overall financial plan for. Don’t compromise, optimise!