Weekly Thoughts 27 March 2015

I thought I’d write a bit about the new tax free savings product idea that we’re all allowed to make use of. This is the opportunity for each individual to invest R30 000 a year and a maximum of R500 000 in their lifetime, with the income thereon being tax free.

I don’t think this is something that most people need to worry about or are actually ready to make use of. I can see the banking products, with cash as the background asset, taking on huge sums of money from folk who just want to make sure they get their share of interest tax free, regardless of the fact that they might lose out on any capital growth over the timeline.

I am certainly not ready to use it. I fluctuate with getting to my retirement annuity maximum tax deduction in the year, which I should maximise first before thinking of this, then I don’t first take full advantage of the exemptions on interest or dividend income that we all get anyway, so again, not ready to go there.

As with many things, a lot of folk will worry that they are missing out on something if they don’t get into it. You don’t need to think this and I would also ask you to have these other steps in place first. So this means there are fewer rather than many people who are ready to make use of this avenue. It is after all, an incentive by government to make people save more, which in itself is a good idea. But it has its place.