Have you considered a tax-free savings account to boost your savings?

Tax-free savings accounts are generally an easy, flexible, and affordable way to save. Tax-free savings accounts were introduced in 2015 to encourage South Africans to save. A tax-free savings account can be a good option if you want to save for a specific goal or have a medium to long-term investment horizon.

With the end of the tax year coming up, now is a good time to consider investing in a tax-free savings account. The maximum tax-free contribution you can make each year to a tax-free savings account is R36 000 (2021 tax year). If you contribute more than that, you’ll have to pay tax on the contributed amount that is over the limit. There is a R500 000 lifetime limit of contributions to tax-free savings accounts.

The investment returns like interest income, capital gains and dividends earned in the tax-free savings account are exempt from tax.

Many tax-free savings accounts have low monthly contribution limits and low investment fees. They also allow you to access your money when you need it, although you will still have the lifetime contribution limit of R 500 000.