Endowment

 

An endowment is a type of savings plan. It provides investors with full access to their money after a specific period (in this case five years) or when the policyholder dies. In South Africa, endowment plans are taxed at reduced rates (compared to the typical tax rate of an individual in the highest income tax bracket). It is important to remember that an endowment is a long-term commitment. To get the full benefit of this type of investment, you must remain invested for at least five years. After five years, you will be able to withdraw your money whenever you need to. When you do decide to withdraw your money, you won’t have to pay any further tax on your investment.

 

Tax Free Savings Account (TFSA)

This account aims to motivate short term savings by not having to pay any taxes within the fund. No CGT or interest tax.

 

• Maximum investment of R30 000 per tax year

• Maximum lifetime contribution of R500 000

• Only fixed fee structured funds can be part of these selections