Tax Free Savings Account - THE BEST WAY TO START SAVING, NOW!
Best suited for long-term investing
Our country's current savings rate is extremely low, and that's why the government introduced the tax-free savings initiative in 2015.
The idea with this option is to get South Africans into the habit of saving by providing an incentive for them to do so, which is that all proceeds earned, including interest income, capital gains and dividends – are 100% exempt from tax.
What are the limits?
The maximum you may save in a tax free savings account, over your life time, is R500,000 and R36,000 per year. Remember, even once you reach your limit of R500,000, these funds will keep on growing with interest, and the amount you might withdraw in 10 or 20 years, inclusive of all interest, will be tax free.
Remember, you as a parent may take out a tax free account on your minor child's name, adding another lifetime R500,000 facility. This could perhaps be used for your child's education, or even an early start to retirement savings.
Withdrawls
You may withdraw from your tax free savings account at any time, but remember that this reduces your life time savings limit by the amount you withdraw.
For example, if you have saved R300,000, and decide to withdraw R100,000, your limit is now reduced to R400,000.
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Save for the long term!
Everyone will have their own reasons for saving but the idea with this option is to save for the long term and to reach the R500 000 limit. At this point you will really start seeing the benefit of having stayed the journey.
Start today!
You can start with investing as little as R200 per month.
We often delay saving until such time when we have the money to save when in fact, that day never arrives. But it is never too late or too early to start saving and it is important to start now and take advantage of options like the?tax free savings account.
Contact me today to help you set up your tax free savings account, or to review your current retirement plan.
Francois Strydom | Innovative Advisory Services
071 671 4301
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