Think its very important to do a page on the TFSA accounts. Bar none in South Africa this is the most important retirement investment to make and I would argue this should be made first before RA contributions.
Let me expand into reasoning here.
The tax free savings account has the best benefit in its name its tax free, no local dividend tax, no income tax, and no capital gains taxes. So you can withdrawal you money tax free. You're growth is a little bit boosted by no local dividend taxes (though some foreign dividend tax still apply) and in retirement you can re balance you portfolio without tax penalties.
The reason why it has to be done first is the limitations set on it by the government. You are only allowed to contribute R36000 a year to it. And a max of R500 000 of contributions and it would take you 13.8 years at max yearly contributions to reach it.
So starting it sooner is better.
The only con of the TFSA is that you can put back what you withdrawal and there is no restrictions on when you can withdrawal. So it takes discipline to leave the money there for retirement.
There is a another article to be written on retirement taxes
Think its very important to do a page on the TFSA accounts. Bar none in South Africa this is the most important retirement investment to make and I would argue this should be made first before RA contributions.
Let me expand into reasoning here. The tax free savings account has the best benefit in its name its tax free, no local dividend tax, no income tax, and no capital gains taxes. So you can withdrawal you money tax free. You're growth is a little bit boosted by no local dividend taxes (though some foreign dividend tax still apply) and in retirement you can re balance you portfolio without tax penalties.
The reason why it has to be done first is the limitations set on it by the government. You are only allowed to contribute R36000 a year to it. And a max of R500 000 of contributions and it would take you 13.8 years at max yearly contributions to reach it.
So starting it sooner is better.
The only con of the TFSA is that you can put back what you withdrawal and there is no restrictions on when you can withdrawal. So it takes discipline to leave the money there for retirement.
There is a another article to be written on retirement taxes