Most South African consumers have not fully utilised their tax free savings benefit

Most South African consumers have not yet utilised their tax free savings benefit for 2016, and they only have until 29 February 2016 to make use of their annual R30 000 contribution limit into a tax free investment of their choice. With only a few days before the conclusion of this tax year, those who manage to make use of this opportunity will be pleased they did so when they receive the earnings. 

“69% of our customers who have invested in a Tax-Free Savings Account have not used their full R30 000 tax free saving opportunity.” says Pieter Du Toit, CEO: FNB Investments. 

“Maximising this small window is a smart financial move for two reasons. Firstly you will benefit from the tax free investment and secondly because the longer you invest your money for, the more you will benefit from earning compounded returns over the period of your investment. With your returns also being tax free, this benefit is further increased.” 

To make the most of the tax free benefits consumers can invest up to R30 000 in a tax free investment before the end of February.  At FNB they have the further convenience of electing to invest either in shares or cash, based on their needs and preferred investment term. FNB offers both a Tax-Free Shares and a Tax-Free Cash account. 

“The cash account is ideal if you are investing for the shorter term and need quick access to your money. Shares are a smarter option for longer term investments because you will not pay tax on your dividends earned and you will further benefit by paying no capital gains tax.

“If you are planning to invest for 3 years and more, the Tax-Free Shares account helps you to grow your investment faster than inflation so that you can maintain the buying power of your money and benefit from capital growth, enabling you to reach your goals sooner.”  

Interestingly, 17% of FNB customers aged between 21 and 30, have opened a Tax-Free Savings account and have opted for the shares option. “It is great to see younger consumers are becoming more investment savvy,” says Du Toit.

You can start a tax free shares account with a contribution of just R300 per month and invest in the top 100 companies listed on the Johannesburg Stock Exchange. What’s more is that all trades placed on the first trading day will attract a fixed trading fee of 0.1%.

When investing in shares, it is important to remember that fees can erode the returns that you earn on your investment, so pay careful attention to what you are paying. FNB have gone to extreme lengths to ensure that our Tax-Free Shares account offers consumers the low fees so they can gain the maximum benefits from their returns and tax advantage.

The concession made with Tax-Free Savings is a major opportunity for South Africans to build a culture of saving without the usual tax burden. It is important to take full advantage of this chance to boost your financial position and long-term financial security.

“It is our belief that all consumers should have access to investment opportunities and we have tried to make is as easy as possible via our Online Banking platform within 5 minutes. Once the account is open customers can immediately start transferring funds. 

“With only 12 days left, now is the time to take full advantage of your 2016 tax benefit and start your investment journey.” concludes Du Toit.