Tax-free investments for senior citizens in South Africa

Tax-free investments for senior citizens in South Africa

By Nedgroup Investments, 01 Nov 2016

Tax-free investments offer hugely valuable savings opportunities for retirees who are feeling the additional burden that compulsory tax payments can create. In the face of rising costs and volatility, the tax efficiencies provided by these products is the ideal complement to post-retirement income.

For investors looking for a hassle-free investment for themselves or for a loved one, tax-free investments have many unique advantages. Firstly, for investors over the age of 65 and above the tax-paying threshold (R116 150 pa), any additional saving opportunity can help protect against the erosion of post-retirement income. Furthermore, tax-free savings allows investors to invest a relatively small amount of money and take advantage of the medium-long term benefits of compounding, without paying any tax on interest, dividends or capital gains.

The additional cash that is available as a result of the tax-free investment can also be a welcome safety net for future events – especially after the investment has benefited from compounding for some years. If this ‘bonus’ is subsequently invested, thanks to the power of compounding, it can become a very significant investment.

Apart from the tax-savings, which will be significant over the long-term, another benefit of tax-free investments for senior citizens is the convenience. You do not need large amounts of cash to invest in tax-free investments. And it’s flexible – you only contribute when you can and there are no penalties for taking a break from contributions. This is a huge plus for older investors who do not want to be locked into a set monthly contribution and would prefer to save as and when they have additional income.

Furthermore, although it is absolutely best to leave your investment for the long-term, money invested in a tax-free investment is easily made available to the investor in an emergency.

If you are interested in opening a tax-free investment account for yourself or a loved one, click here to learn more and start benefiting from tax-free savings today.

You have been subscribed to our newsletter