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How to get started with your TFSA
#1
Introducing the Platinum Wealth and EasyEquities TFSA Basket
JSE Finance Forum Attachment - Filename: platinumwealth-tfsa-basket.jpg   

What is a Tax-Free Savings Account (TFSA)
A Tax-Free Savings Account (TFSA) and a Tax-Free Investing Account (TFIA) is exactly as the name says, it offers you a means to save and invest without having to pay income tax, dividends tax or capital gains tax on the returns from these investments.

The government introduced Tax-Free Investments as an incentive to encourage household savings.  This incentive became available on 1 March 2015.

How does a Tax-Free investment work?
You can only contribute a maximum of R33 000 per tax year (annual limit) and up to the lifetime limit of R500 000 per person.

If a person exceeds the limits, there is a penalty of 40% of the excess amount.  Example: Taxpayer X invests R35 000, therefore, exceeding the annual limit by R2000, 40% of R2000 = R 800 must be paid to SARS.

The returns of your TFSA does not affect your limits. E.g. If you invest R33 000 for the year and receive a return on investment of R5 000, the total amount in the account will be R38 000. The following year, you will still be able to invest your full R33 000 for the year.

What are Exchange Traded Funds (ETFs)
You can open a Tax Free savings and investment account with any licensed Bank, insurer or broker and you can choose from one of the following investment vehicles:
  • Fixed deposits
  • Unit trusts (collective investment schemes)
  • Retail savings bonds
  • Certain endowment policies issued by long-term insurers
  • Linked investment products
  • Exchange traded funds (ETFs) that are classified as collective investment schemes.
We recommend that people start out with ETFs. In our opinion, Exchange-traded funds are one of the most important and valuable products created for individual investors in recent years.

Essentially you can look at an ETF as a diversified basket of different companies, enabling you to buy the basket instead of all the underlying companies individually.

Innovation has been the hallmark of the ETF industry since its beginnings less than 25 years ago. Undoubtedly, there will be new and more unusual ETFs introduced in the years to come. While innovation is a net positive for investors, it’s important to realize that not all ETFs are created equal.

Our ideal TFSA portfolio
Based on the real-world feedback and research by our community members we made this TFSA basket to help South Africans start their investment journey.

With this basket, you will also be joining like-minded investors on our platform and find common ground for further learning, research, and local investor meetups.

Our basket consists of the following ETFs: This portfolio gives you exposure to South Africa, the developed world, emerging markets, and property.

How to open an EasyEquities account
First, you need to click on this link to register (Click this Link)

After you have registered you need to Fica your account by uploading your documents to EasyEquities.

You need to upload a copy of your ID or Passport Document and Proof of Address like a utility bill, such as water, electricity or rates (less than 3 months) or a copy of a signed lease agreement (by both parties), (less than 1-year-old)

Alternatively, you can email the documents to [email protected]
Please quote your account number in the subject line of the email.

How to buy the Platinum Wealth TFSA Basket
Navigate to your TFSA Account and then click on Browse the market.
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Alternatively navigate to your TFSA account and click on this link (Platinum Wealth TFSA Basket)

You can set up a monthly payment either using the funds in your EasyEquities account or you can set up a debit order from your bank account.
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Otherwise you can also buy the basket once off as and when you like to do so.
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If you have any questions regarding the EasyEquities platform feel free to ask @jonobruton or tweet to EasyE directly.
Forum Admin | Platinum Wealth
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#2
Come Monday I am setting up a monthly debit order - I have been wanting to get my TFSA in order for ages now, but having to keep track of all the new ETFs is a bitch, to say the least.

Thank you Platinum Wealth for taking the time to create this basket, I reviewed the ETFs in this basket and read through this thread about structuring your ETF portfolio and from what I can gather this is an optimal portfolio to invest in.

#3
Let's hope so Big Grin
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#4
I have an Online Share Trading account with Standard Bank.  Do I automatically get the tax benafits if I buy an ETF that is classified as collective investment schemes? So in other words I dont get the tax benefit for having money my account, but only for buying and keeping the ETF?

#5
You get the tax benefit for anything that happens inside you TFSA account whether it dividend tax on shares or interest on money. Whether or not you gain any interest on the money in your account depends on the provider though.
IQ Test

#6
(05-23-2018, 02:25 PM)janvdwest Wrote: I have an Online Share Trading account with Standard Bank.  Do I automatically get the tax benafits if I buy an ETF that is classified as collective investment schemes? So in other words I dont get the tax benefit for having money my account, but only for buying and keeping the ETF?

You need to first enable your tax-free account inside the Online Share Trading account (at no extra cost). Inside your Online Share trading account, go to:

Instruments > TFIA Enabled Instruments

Then at the top of the screen you will see this:
JSE Finance Forum Attachment - Filename: Capture.JPG   

This will give you a tax free "area" within your online share trading account and anything you do inside that area will be tax free, subject to the annual limits. In other words, all dividends paid are tax free, all capital gains are tax free, you can sell and buy inside the "area" as you wish without losing benefits. In other words, 20 years from now, if you sell everything in the "area" and buy dividend producing products, you can have a tax-free source of income. It's even exempt from estate tax if you die. In other words, from now until forever, no profit you make inside that area will ever be taxed in any way.

However, even tax-free enabled ETFs are still taxed if they are purchased outside the tax-free "area" ie. if they are bought on your normal OST trading account. You must enable the tax-free investment account within the online share trading first and then buy ETFs in that "area".

#7
Oh, I get what you are asking:

The tax free investment is different to a retirement annuity.

In an annuity, you buy the product now and claim the tax now. When you draw the money during retirement, you then pay tax.

Tax free investment accounts are the opposite. You buy the EFTs now, but you can't claim the money you spend on them back on your tax return now. But 20 years from now, when they are producing several thousand Rands of dividends per month, you can draw those dividends tax free. Also, if one of the ETFs in those accounts escalate exponentially and becomes worth billions, you can draw those billions without paying capital gains tax.

In other words, the difference in the tax benefits is:
- RAs - claim tax benefit now, pay tax later.
- TFIAs - can't claim back tax now, but will never pay tax on growth or dividend profits on drawing them later.

#8
crystal clear thanks !






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