Have a dream in mind… start saving today and make it a reality

There are many reasons for people to save. These include wanting to purchase a holiday home or an investment property, travelling the world in retirement and even starting a business. These goals and dreams may sometimes feel out of reach. However, saving and investing a portion of your income regularly has the potential to grow your savings and can get you closer to achieving your dream.

There are various investment vehicles through which you can save and grow your savings. Many of these types of accounts are however taxed in accordance with a person’s marginal tax rate. When you are saving for a goal requiring a large sum of money, it is likely that some tax will be incurred as these accounts will likely be used to save. You can however enhance your savings further by investing in tax-efficient investment vehicles. These investment vehicles offer tax benefits and can therefore assist in increasing the value of your savings over the long-term. While these are great investments to grow savings over the long-term, the drawback is that there are maximum amounts which can be invested in these accounts. The following are tax efficient investments that should be considered for long-term savings:


TFSAs are investment accounts which offers investors the opportunity to grow their savings without incurring any tax on capital gains, dividends and interest earned on the investment. There are a wide range of underlying investment funds as well as money market types investments that can be invested in through TFSAs. The current investment limits on TFSAs are R 33 000 per annum or R 500 000 over an investor’s lifetime. You can also invest through monthly contributions where the maximum contribution is an amount of R 2 750 per month. The only time tax will be incurred on this investment is if an investor breaches the allowable investment contributions.


A Retirement Annuity is a great way to supplement your retirement savings in your company retirement fund. The tax benefit is that contributions towards retirement savings products are tax deductible. An investor can currently invest up to 27.5% of the higher of taxable income or remuneration, capped at an annual amount of R 350 000, into retirement savings products to receive the tax deduction. These contributions will be deductible from your taxable income and therefore reduce the income tax you are liable for. You can also reinvest the tax saving you receive. The additional tax benefit to investing in a retirement savings product is that there is no tax on any growth in the value of your savings. This means no tax on capital gains, interest and dividends.

These investment accounts can significantly add to your aggregate savings and should definitely form part of one’s savings plan.

This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted. (E&OE)