TFSA worth it or not

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jchevreau

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Hi All,

I am currently looking at whether or not i should start a TFSA. Is it worth or not?

Can everyone give me the pros and cons based on your experience or knowledge?

Thanks
 
jchevreau said:
Hi All,

I am currently looking at whether or not i should start a TFSA. Is it worth or not?

Can everyone give me the pros and cons based on your experience or knowledge?

Thanks
Click to expand...

Well if you are saving/investing any sort of cash for retirement then yes, it is worth it.

PROS - tax free
CONS - only ETFs can be used (if you consider that a con) or cash accounts. You cannot by specific shares.
 
Hamster said:
Well if you are saving/investing any sort of cash for retirement then yes, it is worth it.

PROS - tax free
CONS - only ETFs can be used (if you consider that a con) or cash accounts. You cannot by specific shares.
Click to expand...

Can also use many unit trusts, index tracking or managed ones, not just ETFs.

As to OP, its worth it, if investing it, not just putting it into a normal savings account.
 
supersunbird said:
Can also use many unit trusts, index tracking or managed ones, not just ETFs.

As to OP, its worth it, if investing it, not just putting it into a normal savings account.
Click to expand...

Fair enough, I tend to forget about unit trusts. But basically you are using funds, trackers and other collective investment schemes. I don't consider it a CON. To be honest, I don't see how a TFSA/TFIA has any cons.
 
It's not worth it for cash. You have a tax exemption of R23K per year for interest in a normal savings account - use that for cash instead.
 
JayM said:
It's not worth it for cash. You have a tax exemption of R23K per year for interest in a normal savings account - use that for cash instead.
Click to expand...

Great thank you everyone.
I have a shares account with Easy Equity and think they may be better than anyone out there even my bank. However i am still waiting for their support to come back to me as i would like to see if there is any costs especially should i want to cash out or change to a different risk profile later on.

In terms of investment i am looking at > 10years, to help with paying off my bond and or helping with school / university fees.

I thought that the limit is 30K a year and 500K lifetime, has this been adjusted?

Any ideas or suggestions in terms of how can i diverse my potential portfolio bearing in mind that if i start i would go high risk.

Thanks
 
jchevreau said:
Great thank you everyone.
I have a shares account with Easy Equity and think they may be better than anyone out there even my bank. However i am still waiting for their support to come back to me as i would like to see if there is any costs especially should i want to cash out or change to a different risk profile later on.

In terms of investment i am looking at > 10years, to help with paying off my bond and or helping with school / university fees.

I thought that the limit is 30K a year and 500K lifetime, has this been adjusted?

Any ideas or suggestions in terms of how can i diverse my potential portfolio bearing in mind that if i start i would go high risk.

Thanks
Click to expand...

Those are still the limits. If you have a bond, pay extra into that before a cash TFSA. Around 10% guaranteed return after tax is better than any TFSA savings account.
 
The only con I can think of is a minor one. You are still taxed on dividends for foreign funds, so you won't score those savings with the DBX trackers and foreign UTs. At least you get out of CGT one day.
 
patrick said:
The only con I can think of is a minor one. You are still taxed on dividends for foreign funds, so you won't score those savings with the DBX trackers and foreign UTs. At least you get out of CGT one day.
Click to expand...

That is where I am confused According to that nirina chick on Twitter DBx divends are tax free they the DBX trackers bank pay tax into he foreign countries before it gets into your EE TFIA account tax free from sa tax

That's how I understood it?
 
The only downside is that it is too little to be of any real impact to a long term investor.

Upper limit should be 2 million randelas.
 
jchevreau said:
Great thank you everyone.
I have a shares account with Easy Equity and think they may be better than anyone out there even my bank. However i am still waiting for their support to come back to me as i would like to see if there is any costs especially should i want to cash out or change to a different risk profile later on.

In terms of investment i am looking at > 10years, to help with paying off my bond and or helping with school / university fees.

I thought that the limit is 30K a year and 500K lifetime, has this been adjusted?

Any ideas or suggestions in terms of how can i diverse my potential portfolio bearing in mind that if i start i would go high risk.

Thanks
Click to expand...

jchevreau, I have an EasyEquities' TFSA account and you probably won't find any better with other stockbrokers. I know, because I work in the industry :)

You can now set up recurring investments that will either buy you additional shares in their "baskets" or ETFs of your liking.

So to answer your question about costs, there will be the normal trading costs when you exit, with no tax consequences. You only pay "40%" tax if you contribute more than R30k p.a. / R500k per lifetime (will hopefully be adjusted with inflation over time). Also bear in mind that the R30k / R500k limit is not "per account / company".

Here is the TFSA baskets I was referring to: https://www.easyequities.co.za/About/TaxFreeInvesting
 
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