South Africa, 14 February 2024: Tax-free savings (TFSA) vehicles celebrate their ninth anniversary in the country this March. They’ve played a pivotal part in changing South Africans’ savings outcomes, gaining popularity as a powerful means of growing one’s money, without the burden of tax. Here, Duma Mxenge, Business Development Manager at Satrix, shares critical considerations that investors should keep in mind when investing in a TFSA.

  1. Mind the Contribution Limit: Annual contributions to your TFSA are capped at R36 000, while the total lifetime contribution may not exceed R500 000. The penalties for going over the limit are a hefty 40% of the amount exceeding the limit.
  2. Your TFSA is not for a Rainy Day: Investors should not treat a TFSA like an emergency fund to dip into when life happens. The tax benefits of a TFSA are maximised when the account is held for a minimum of ten years, otherwise, the advantages may go unrealised. Rather, your TFSA should be part of your longer-term financial plan. By contributing regularly, your TFSA will grow, benefitting from the magic of compound interest and substantial tax savings over time. Remember, you cannot reinvest any money you withdraw at a later stage – any funds you invest count towards your lifetime limit
  3. Work with a Financial Adviser to Build Your Blueprint: A financial adviser can play a pivotal role in helping you harness the full potential of your TFSA investment. Instead of sporadic contributions, for example, a strategic monthly investment amount can lead to substantial long-term growth.
  4. Maximise Your Contributions: If you commit to contributing as much as possible to your tax-free savings account, you could reach your lifetime limit in just under 14 years. If you faithfully invest monthly, maximise your contributions, and use the best investment vehicle and strategy for your needs, tax-free savings accounts can make a game-changing contribution to your future retirement.
  5. Keep it Simple: In a nation with high taxes, leveraging every available tax break is essential. It’s critical to make your money work harder for you. For example, you can effortlessly deposit funds into your TFSA via SatrixNOW, and then allocate these suitably– to equities (both locally and offshore), property, bonds, balanced funds and cash –to suit your risk profile. ETFs track an index, giving clients a similar performance to the stock market over time. Multi-asset class funds are great for lower risk appetites as they help weather volatility.

Mxenge says armed with the right knowledge, even the most novice investors can create a path of sustained financial growth and tax efficiency. TFSAs have changed the game and continue to be a critical tool to empower investors to live with financial confidence.



Satrix is a division of Sanlam Investment Management.

Satrix Investments (Pty) Ltd is an approved FSP in term of the Financial Advisory and Intermediary Services Act (FAIS). The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision. Satrix Managers (RF) (Pty) Ltd (Satrix) a registered and approved Manager in Collective Investment Schemes in Securities.

While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSPs, their shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information.

Tax Free Savings Accounts: Annual limit of R36 000, lifetime limit of R500 000, 40% tax penalty applicable for contributions above the limit, per individual.