For many South Africans investing seems impossible because of the current socio-economic pressures we are all facing. Uncertainty over whether you will still have a job or if your business will be able to survive the current economic shutdown are amongst our biggest concerns. However, if there is one lesson the current economic environment has highlighted it is the need for long-term financial planning.
South Africans do not have a strong savings culture, especially when it comes to retirement, which is why tax-free investments (TFIs) were launched in 2015 as part of the Government’s initiative to encourage South Africans to save more.
Unlike traditional investments, TFI returns are exempt from local income tax, dividends tax and capital gains tax making them an attractive investment vehicle for long-term, goal-driven investment. TFIs have several investment benefits, most of which are best realised by staying focused on your long-term investment objectives and staying the course.
While it is important to note that any funds withdrawn from TFIs cannot be replaced, when managed correctly TFIs can lead to a substantial cash injection for financing major life events.
“Tax-free investments have become an important part of a well-rounded, diverse investment portfolio, they are a tax-efficient way to subsidise your long-term investments such as your retirement or saving for your children’s education” says Thandi Ngwane, Head of Investment Distribution at Standard Bank.