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Johnny H
Tax Free Savings - 27 February 2017, 12:33

How does the tax free investment work?

Hi Johnny, Thank you for your question. TFSA was introduced to foster and promote a savings culture in South Africa. Your investment is flexible and therefore you have access to your money within a few days, it’s advised to leave these funds for retirement in order to achieve maximum tax-free growth. All of the growth on your investment is tax free; no capital gains, dividend or income taxes are payable. Legislation also regulates the fees on these investments, keeping them low. You can invest through monthly contributions or a yearly lump sum to a maximum of R33 000 per year (R30 000 for the 2016 financial year). Most companies allow you to start investing from as little as R500 per month. The current maximum contribution in your lifetime is R500 000.00 Case study Joe is 25 years old and decide to start saving toward his retirement. He invests R1000 monthly in a TFSA for 40 years. His total contribution: R480 000 Average Return 8% (moderate risk) Result; Joe will have R3 491 007.83 at age 60. The growth on his money is tax free with minimal investment fees. Be like Joe and book an appointment by clicking on the button next to my name to discuss this further. Regards, Charl