The minimum and maximum amounts required to open a Savvly account are:
- Fund #1 (for accredited investors): The minimum is $10,000 and the maximum is $100,000.
- Fund #2 (for accredited investors and qualified purchasers) The minimum is $100,000 and the maximum is $300,000.
“If an individual invests in Savvly well before their payout date, the amount received on that date can be significant, which can be beneficial for their lifestyle, wealth preservation and transfer strategies, and needs if they live well into their 80′s or 90′s,” Fusato said.
Fusato, via email, offered several reasons why Savvly differs from a tontine, a centuries-old concept involving people putting in money that they couldn’t take out. He noted Savvly’s flexibility, as investors choose their own amount and payout age, can adjust the target age at any time, and can invest anytime and at different amounts.
Among other points, tontines required cohorts of people of the same age, a lifetime commitment and a large portion of net worth to generate the necessary income, “as they are basically annuities with mortality credits,” Fusato said.
“In tontines, the oldest person always wins, while with Savvly that is not the case because each client decides her own payout age,” he said. Tontines only work for investors when a member of their investing cohort dies, according to Fusato.
Whereas the ancient tontine model relied on others’ deaths and misery, Savvly “enables people to invest in their own retirement goals, with limited risk and investment needed,” he added.
Earlier this year, Guardian Capital LP introduced a modern tontine for Canadian investors aimed at solving what the firm called a misalignment between human and portfolio longevity.
Moshe Milevsky, a finance professor and author who helped develop Guardian’s tontine, described it at the time as a garden variety mutual fund that investors could never exit. The fund was designed to provide payouts to surviving unitholders in 20 years, based on compound growth and survivorship credit pooling.
In the traditional tontine structure, a group funds an annuity, with payouts to survivors growing as each participant dies.