Why a tax-free savings account is like a 40-year love affair
How to use your TFSA as a valuable savings and retirement tool
A good savings product can be like a good marriage. If you make the right choice from the outset, it will get better with age and look after you in retirement. The national Treasury introduced tax-free savings accounts (TSFAs) from March 1 2015, allowing individual investors to invest up to R30,000 of after-tax income a year into a specific product in which interest, dividends and capital growth are tax free. In March 2017, the amount was increased to R33,000 a year. The capital investment is capped at R500,000 over the investor’s lifetime. While a TSFA may appear modest, it has attractive long-term potential, and the expectation is that the cap will be raised over time.TSFAs are largely aimed at encouraging lower-income earners to save, but they are also well suited to higher-income earners who can make relatively sophisticated choices to maximise their returns and minimise their tax liability in retirement. There are two phases in investors’ earnings lifecycles. In the first phase...
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.