Best Ways To Invest In A Tax Free Savings Account (TFSA) In South Africa
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- Опубліковано 30 чер 2024
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If you’ve started taking an interest in your personal finances, chances are good that you’ve been introduced to the Tax Free Savings Account being offered to South African citizens. And doesn’t it just give you the absolute tingles when you think about paying less to tax to the South African government? I know for me it does…
And yes, this is arguably one of the best investment instruments available to us, but only if you really understand how to use it effectively. So in this video, I will explain why a TFSA is so powerful, how much money you can expect to save on Tax inside a TFSA, what you should consider putting inside your TFSA, where to invest your TFSA and if you should invest in it monthly or just make a lump sum investment every year.
I’ve added timestamps in the description if you want to jump to the sections that most interest you, but I do want to encourage you to watch the whole video so that you can get a proper understanding on how to effectively become a millionaire using these strategies.
I hope that this video helped to convince you that a TFSA is arguably one of the best deals in South Africa. If you are thinking of starting to invest, then a TFSA should be your first priority. After you reach its contribution limits, then start adding to a RA or pension fund. But before doing any of this, make sure you have proper insurance as well as a 3 to 6 months’ worth of living expenses in an emergency fund.
Here is a breakdown of the info covered in this video:
00:00 Introduction
02:40 Tax payable on normal investments
05:56 How much tax will a TFSA actually save?
07:28 Which asset classes should you include in your TFSA?
13:14 Where to invest your TFSA
15:53 Lump sum vs Debit order for a TFSA
18:07 How to move a TFSA
19:13 Take home message
Articles mentioned in this video:
How much tax will a TFSA save you: rb.gy/tghquy
Comparison of best Unit trusts and ETFs for a TFSA: rb.gy/w2n3oh
Where other S'africans are invested: rb.gy/jmzlzl
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Dankie, ek leer baie! Toe ek jou ouderdom was, het niemand ons finansieel opgevoed nie, en nou moet ek kyk na wat ek op 54 het en die beste van die saak maak vir die volgende dertig jaar. Gelukkig kan my kinders van die begin af beter keuses maak.
Shew TFSA is quite a long term commitment! glad I watched this before just buying - was thinking to buy prescient income as the dividends look quite decent
Must be a mind reader for you to upload a video about the very topic I was literally just wondering about 🤨
Great content man, keep it up!
Haha it's a good thing that you are wondering about important things like TFSA's, the sooner you start one, the better, if, of course, you use it the right way. ;)
Almost rolled my eyes when I saw another TFSA video but this was superior!! Thank you for going into the calculations and acquiring and sharing info. I saw a “personal fianance” author suggesting using it as a house deposit, really scary.
Would be keen on knowing when an RA no longer makes sense and discretionary investing is favoured,
Thanks again, keep it up💪🏾
Thanks Natsirai. Jah a TFSA can be really powerful, but only if we understand exactly how the tax structure in SA works. It is important to educate ourselves and others about personal finance, as school did not prepare us enough and the finance industry can sometimes lead us astray if we are not well-informed.
Agreed. It's hard to know when the right time is to invest in discretionary investing. Would love to see a video talking about his subject. For me discretionary investing seems to be something one does to start thinking about luxuries. If financial freedom is more of an aim then I suppose you put it off as long as possible? ;)
Dankie vir jou moeite en vir die deeglikheid van jou inhoud. Ek leer baie.
Dankie Willie! Ek waardeer die terugvoer en ek is bly die videos help :)
Thank you so much, I am really learning a lot from you
You are very welcome :)
Excellent video!
Thank you very much! :)
Great content... What would be your 4 best retirement ETFs?
Thanks Itumeleng. I prefer well diversified offshore ETFs for long term investing, so for me the Coreshares Total World ETF is a great option for a standalone ETF.
Pieter, I'm still a bit unsure of how to split up in my TFSA
I'm considering to pick one diversified ETF with just equity to keep things simple.
What would you educate, rather to add property, bonds and cash as well?
Will you also split it up like you said in your asset allocation video (DIY investment portfolio)?
Hey Kimberly. It really depends on your personal risk tolerance and investment time horizon. If you have more than 10 years to invest in your TFSA, then I would say go for Shares and Property. Cash and bonds are generally poor options in a TFSA because of their slow growth and the annual interest tax exemption that we all get in any case.
So if you want to keep things simple, then just buy one well diversified ETF like the Coreshares Total World.
But if you want to mix it up a bit, you can add Property ETFs to your portfolio as well, albeit in a smaller ratio, as these are very tax efficient within a TFSA.
You can check out my June Portfolio update where I explain how I invest my TFSA and the reasons behind my decisions, which might help answer some of your questions :)
Thanks so much. I will definitely check it out!
What is your opinion in a total world etf vs just invwsting in the s&p500?
Hey Nico. Both of them are great ETFs as a whole, but it really depends on what you want to use them for. The S&P 500 is a stable investment as it contains the biggest companies in the US (and world for that matter), but I wont consider it a well diversified ETF on its own as it is heavily concentrated on the US market. A tot world ETF like the Ashuburton 1200 is more diversified acrosa countries, and include countries from both developed and developing countries, so as a single ETF you probably cant go wrong. But again, it is heavily concentrated on shares. I like to diversify as much as possible, within and between sectors, including a good mix of shares, property, bonds and cash. It really depends how much you want to be involved in your investment journey. If you would like to keep it simple, then yes, a world ETF like Ashburton 1200 or a combination of the MSCI world and MSCI Developing markets will do just fine. But if you want to optimize it as much as possible (like me), then the allocation becomes a bit more complex, but really fun! In my next video I will explain how to decide what to invest in and the things to take into consideration, so it might help to watch that video as well. ;)
Hey Pieter. Great content. I have R3K a month can you tell me what can I invest in my TFSA? I'm looking at long-term investment 10 years plus
Hey man. I have a whole playlist on TFSAs on my channel that you can watch where I break down exactly what assets and products are best to put inside your TFSA :)