[EXPLAINER] Tax Free Savings Accounts vs Retirement Annuities 101
Tax eats your money – the less you have to pay, the more it can compound.
Tax-free savings accounts (TFSAs) and retirement annuities (Ras) are, for most South Africans, the most tax-efficient way to build their wealth.
TFSAs and RAs have different features that make them suitable or unsuitable, depending on your own circumstances and needs.
Both allow lumpsum (once-off) or monthly investments
You can access funds in an RA only after age 55 while the funds in a TFSA are available at any time
An RA allows you to deduct your contributions from your taxable income
Contributions to a TFSA are not tax-deductible, but returns are tax-free
Africa Melane asked Michael Kirkpatrick of Alexander Forbes to explain a bit about both so you can make the right choices.
Both are long-term savings vehicles… with certain tax advantages…Michael Kirkpatrick, Alexander Forbes
There are limits to how much you can contribute to a TFSA…Michael Kirkpatrick, Alexander Forbes
A lot of people opt for retirement annuities because it’s restricted. They don’t trust themselves…Michael Kirkpatrick, Alexander Forbes
The biggest destroyer of wealth is people chopping and changing… The worst thing is to get scared when markets go down…Michael Kirkpatrick, Alexander Forbes
For more detail, listen to the interview in the audio below.
This article first appeared on CapeTalk : [EXPLAINER] Tax Free Savings Accounts vs Retirement Annuities 101
Source : https://www.123rf.com/photo_43207740_piggy-bank-currency-savings-.html?term=piggy%2Bbank&vti=nts1yy3jouttac8b7n-3-63