A tax-free investment account is arguably one of the best ways to invest your money for the future. Who wouldn’t want to benefit from tax-free investment returns that have major long-term advantages? You’ll be able to grow your money at a faster rate and get one step closer to achieving your financial goals.
On that note, let’s set taxes aside and explore the question on everyone’s mind: Do I need a tax-free investment account?
The straightforward answer is “yes,” however, most people like to know the pros and cons of an account before making any rushed decisions. In order to help you better understand tax-free investments, this blog will provide a concrete definition and delve into the pros and cons of opening an account.
Tax-free investment accounts defined
A Tax-free investment account allows you to grow your money without paying tax on interest, dividends, or capital gains. It can only be opened with an accredited financial services provider. These include licenced banks, long-term insurers, registered collective schemes and so forth.
A tax-free investment account can be invested in a fund traded on the stock exchange or used as a savings account. The account is appealing due to its low costs, tax efficiency, and flexibility. You can either make monthly contributions or commit to a once-off payment.
All you have to do is decide how much you want to invest and make the relevant payments. Try to leave the money in the account for as long as possible, allowing the investment to grow sufficiently. But, when all is said and done, you can access the money whenever you need it.
The pros of tax-free investment accounts
It goes without saying that the major benefits of tax-free investments are the non-taxable investment returns. That’s enough of a reason to convince most people to open an account. However, there are also the added benefits of:
The cons of tax-free investment accounts
Although tax-free investment accounts seem like a dream, there are a few cons to be aware of. The cons aren’t deal-breakers; however, you should consider them before opening an account. The cons of the account include:
Tax-free investment is an incentive to encourage household savings in South Africa. The incentive was introduced on 1 March 2015 and since then hundreds and thousands of South Africans have benefited from this investment opportunity. It’s successfully made financial investment more accessible for your everyday citizen.
If you’d like to know more about tax-free investments, consult a certified financial planner or your financial service provider. They can assist you in choosing a tax-free investment solution that suits your needs and financial goals.