Tax-free savings: ETF choices

mr_norris

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What puts me off is the small amount of dividends being paid out compared to interest that could have been earned.
I think of dividends as bonus money. I also think that the growth is supposed to come from the growth of the companies you've bought into with the ETF. TFSA's are a long term thing, so comparing a TFSA that's just money vs one that's invested in ETF's is not really fair in the short term. Clever people have determined that stock market growth yields greater returns than money invested in a savings account, but in the long term.

I do both, with my emergency fund stashed away in Tyme bank (for that sweet 9% PA) and the rest in investments with EE (for now).
 

peanutbunny

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I'm still a uni student who doesn't earn a fixed income other than side hustles, will I still be able to open a TFSA?
 

Hamster

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I've seen people complain about EE's website. It's not the best, but it's functional.
They have many issues ecery year: wrong payouts, no payouts, wrong taxes charged etc. It's all documented on the forum.
 

Bivesh

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Another idea if you are not looking at shares, go for a fixed deposit (that is what I am actually looking at now).

A few firms offer just under 10%, so shop around.
What's the potential tax saving on this? SARS allows one to get around R20K a year in interest before taxing it.
 

zerocool2009

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What's the potential tax saving on this? SARS allows one to get around R20K a year in interest before taxing it.
The real benefit isnt now ... but lets say in a few years when the interest earned are more than the capped "free" amounts by sars
 

mr_norris

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The real benefit isnt now ... but lets say in a few years when the interest earned are more than the capped "free" amounts by sars
I think it's a huge missed opportunity when people go for normal "savings" TFSA's. TFSA's are a long term thing, not meant for short term savings at all. Yes, it can be used like that, but I wouldn't do that. I mean, I wouldn't be happy with just beating inflation and getting a little bit on top of that. To put it into perspective, you'd need around 300k in good savings accounts to generate that sort of interest (it's rough maths, but it illustrates my point).

It's been proven time and time again that equities outperform savings accounts in the long run. On top of that (depending on your provider and what they offer), you can get as much international exposure as you like - unlike RA's where it's limited to 30% or something.

Yes, hitting the interest earning cap is possible, but you could always funnel some savings into an RA to drop it (if you haven't maxed that out already). Alternative ways of not getting taxed hard after doing that is sort of beyond me.
 

Gaz{M}

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I think it's a huge missed opportunity when people go for normal "savings" TFSA's. TFSA's are a long term thing, not meant for short term savings at all. Yes, it can be used like that, but I wouldn't do that. I mean, I wouldn't be happy with just beating inflation and getting a little bit on top of that. To put it into perspective, you'd need around 300k in good savings accounts to generate that sort of interest (it's rough maths, but it illustrates my point).

It's been proven time and time again that equities outperform savings accounts in the long run. On top of that (depending on your provider and what they offer), you can get as much international exposure as you like - unlike RA's where it's limited to 30% or something.

Yes, hitting the interest earning cap is possible, but you could always funnel some savings into an RA to drop it (if you haven't maxed that out already). Alternative ways of not getting taxed hard after doing that is sort of beyond me.
Not RSA equities though. Last 10 years, 2% growth.
 

mr_norris

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ALSI 2008/06/30: 30413
ALSI 2018/06/30: 58208

Growth 91%
Inflation over 120 years = 72%

Real growth of money = 19% = 1.9%/ year
Ok, fair enough. I didn't have inflation in mind when comparing a normal "savings" TFSA vs equities, but if you can find a normal savings TFSA that beats the ALSI taking inflation into account for both, then you are the man. Otherwise, you have just proved my point.
 
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zerocool2009

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I am getting a bit gatvol how TFSA products just added fees and customers must just say "yes" its ok ...
 

TheJman

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I'm still a uni student who doesn't earn a fixed income other than side hustles, will I still be able to open a TFSA?
This is really encouraging to see!

I wish wish wish I had started earlier with my saving, sadly, you can't buy your way back to time in the market...

Good on your man! Even if you're putting away R100 a month, time is your best weapon with growth!
 

Gaz{M}

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This is really encouraging to see!

I wish wish wish I had started earlier with my saving, sadly, you can't buy your way back to time in the market...

Good on your man! Even if you're putting away R100 a month, time is your best weapon with growth!
and not relying on the RSA economy to "grow" your money over time.
 
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