Dear [xxx]
A new year is a good reason for a party. However, not all new years are fun affairs. The start of South Africa’s tax year, for example, is rarely welcomed with music and dancing. That’s unlikely to change. However, there is a simple way to make sure that the arrival of March every year is a financial milestone worth celebrating.
Four words to fine-tune your finances
There are four almost magical letters in South Africa’s tax and investing landscape: TFIA (tax-free investment account). This is basically a gift from government to disciplined investors. All money invested using a TFIA incurs zero tax. That’s right, all the interest, dividends and capital gains are yours.
Of course, there are some restrictions. Effective 1 March 2026, you can invest a maximum of R46 000 per tax year in your TFIA for a lifetime limit of R500 000. Just remember that any withdrawals count against these upper limits, meaning this is best treated purely as a long-term investment. But every cent those investments earn belongs to you.
This is why so many smart investors use February and March to set themselves up for the tax year ahead. Some will add the full R46 000 to their account at the start of March. This maximises the opportunity for growth.
Many find it more manageable to build the investment with smaller sums invested during the year. For example, investing R3 833 every month ensures the full allowance is used each year. But there is no lower limit. You could invest just a few hundred rand each month. It all counts – and it’s all tax-free.
New year, fresh start
While the TFIA doesn’t promise a party, it does give you the chance at a financial fresh start every March. And as with all new beginnings, the sooner you start, the more time you have to reap the rewards.
That applies to your kids, too. You can open a TFIA in your child's name and give them a head start on their financial future. Just bear in mind that contributions made now count towards your child's lifetime limit of R500 000, so it is worth planning those contributions carefully.
1nvest offers a selection of index-tracking products – unit trusts and ETFs – that you can invest in using your TFIA. Explore these products and learn how to start your TFIA here. Speak to your financial advisor about the benefits of tax-free investing.
Collective Investment Schemes (CIS) are generally medium- to long-term investments. The value of participatory interests may go down as well as up. Past performance is not necessarily a guide to future performance. CIS are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of fees and maximum commissions is available on request from the manager. The manager does not provide any guarantee with respect to the capital or the return of a CIS portfolio. These portfolios are third-party-named incubator portfolios. The manager retains full legal responsibility for these portfolios.
1nvest Fund Managers (Pty) Ltd is an authorised financial services provider (FSP), FSP No. 49955, under the Financial Advisory and Intermediary Services Act (FAIS), Act No. 37 of 2002. The manager of the Schemes is STANLIB Collective Investments (RF) Pty Ltd and registered in terms of CISCA. For the basis and information on awards and rankings, please contact [email protected].
