How to save money?

[InternetSwag]

Hi guys,

Thus far I've always just put my savings into either altcoin or luno. I used some of it buying a car a year ago.

Now I'm wondering about my options. It seems that now tax is an issue when you invest in crypto? I've never not invested in crypto, so my knowledge about savings at the bank etc are literally zero.

What are my options? How do you save money? Do I have to pay tax on savings as well when withdrawn? I mean then I might as well just keep my money in my savings account?

 

[Johnatan56]

Investing in crypto is like investing in assets, profit you make is counted as income (so put in vs take out).
Investing in a bank's saving products is interest income, it has a separate income table: https://www.sars.gov.za/tax-rates/income-tax/interest-and-dividends/ exemption is up to R23800 pa.

 

[mr_norris]

Hi guys,

Thus far I've always just put my savings into either altcoin or luno. I used some of it buying a car a year ago.

Now I'm wondering about my options. It seems that now tax is an issue when you invest in crypto? I've never not invested in crypto, so my knowledge about savings at the bank etc are literally zero.

What are my options? How do you save money? Do I have to pay tax on savings as well when withdrawn? I mean then I might as well just keep my money in my savings account?

The tax man will follow you wherever you go. My strong points when it comes to finances don't include crypto - I tend to stay away from that.

Some stuff is taxed based on interest. So the interest you earn on savings accounts, interest earned in your brokerage account (if they offer that), interest earned on bonds, and so on. I think the first R23800 or somewhere around that isn't taxable. Anything after that, you pay tax.

Other stuff is taxed based on income. I think dividends from REITs are. Not 100% sure, but that's an example.

Other stuff is capital gains tax. Easiest example is if I buy $100 in AMD and it shoots up to $200, and I sell, the $100 I made is taxable. But, I think you only pay capital gains tax after the first 40k (in rands) you've made? I am not 100% sure. Then finally, if you invest in a company or product that pays dividends, you are taxed 20% on the dividend payout - they take that from you straight away, so you don't really have to worry about much admin there. The percentage might differ for international stuff.

What do I do with money? I hold a fair amount in Tymebank. That is my emergency fund. I don't add to it, I just take when the interest builds up a bit. The rest I invest. I have a bit going to an RA but it is not a priority for me. I prioritise TFSA's. IMO if you want to invest and hold for many years, TFSA is the way.

 

[Hamster]

Do I have to pay tax on savings as well when withdrawn?

You earn interest on cash savings. They add that interest to your yearly income and tax you accordingly (Income Tax).

You buy and sell assets (shares, crypto etc) are taxed when sold (Capital Gains Tax)...well for the most part. The calculation is a bit more complicated but capital gains tax is less than income tax.

So anyway, unless you are financially literate and taking advantage of tax breaks etc. it is safe to assume that the more tax you pay the better you are doing.

If you want to save like a grown up then it's the usual:
- sort out insurance and income protection so that you still have income/payouts if you cannot work anymore
- pay off bad debt (credit cards etc. with high interest rates)
- build a 6-8 month emergency fund in cash
- come back with more questions after that

 

[Johnatan56]

You earn interest on cash savings. They add that interest to your yearly income and tax you accordingly (Income Tax).

No, interest is taxed separately.

 

[Bill Clitnon]

Are you comfy with investing ONLY in crypto? That sounds like very high risk.

 

[zerocool2009]

What a great question... how to save!

You can start with an emergency fund, try and save 30% of your salary. Do that on an ongoing basis.

Open a deposit account with high interest. The best so far, Tyme, as nothing is fixed or locked in.

Then read up on:
- Endowments
- Unit trusts
- RA’s
- Tax Free Investments
- ETF’s

Make sure you are on the right medical aid plan as-well. If you have car insurance, review that yearly.

Personally for me, how to answer your question how do you save?

I have a motto, I start a new type of investment every July per year, increased by 10%. From a pure savings account, to endowments, RA’s etc! That forces me to save!

 

[zerocool2009]

And if you invest, go direct. I also was in the "broker" trap ! After I politely asked them to go direct, my fees dropped by 60%

Brokers just send a happy birthday message once a year ! LOL

 

[gboy]

And if you invest, go direct. I also was in the "broker" trap ! After I politely asked them to go direct, my fees dropped by 60%

Brokers just send a happy birthday message once a year ! LOL

Not to mention that they buy and sell to what makes them money and not necessarily in your best interest. The only time I ever hear from my broker is when he has a new Idea or product that is a must see magical Beanstalk.

 

[saturnz]

Are you comfy with investing ONLY in crypto? That sounds like very high risk.

from the OP it seems he has no idea what he is doing, so I doubt he is even aware of any risks that comes with such a narrow portfolio