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Split TFSA limit between ABSA and EE?

DieLyn

By DieLyn
in General Finance

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DieLyn Newbie

DieLyn

Posted
Posted

Hi, guys and girls

 

I would like to know if the above if possible.

 

I just would feel a bit more "secure" if I could split my investments rather than have a huge amount in one platform.

 

Also, I am investing for the first time and I have saved R33000 and plan on investing all of it at once into a TFSA. Is this advisable? (I have insurances and emergency accounts sorted out already)

Bandit Newbie

Bandit

Posted
Posted

Welcome

 

First, they call it "Lump Sum" and "Dollar Cost Averaging", the latter being regular and consistent contributions (R2750 pm instead of a R33,000 pa lump sum). There's no right and wrong answer, historical data seems to indicate that lump sum investing outperforms dollar cost averaging and has the potential advantage of keeping transaction costs down. Since you have the lump sum ready you can just as well invest it and get it done with.

 

Personally, I contribute every month. That way it becomes part of my monthly "expenses" and I do not need to save up a lump sum to invest for next year. It's just simpler and helps keep some of the volatility in check.

 

As for multiple providers, yes you can split it. The totals and limits on TFSA accounts (max R33k pa investment, R500k lifetime limit) are tied to you as a person/tax payer. So if you open a TFSA with EasyEquities and deposit R20k and open another TFSA with Sygnia and deposit R13k you are good for the year.

 

I don't think you need to worry about having too large a sum on one platform especially when starting out. The ETFs etc. you buy are owned by you and the platform you make use of is just a way of accessing them. If ABSA goes bust you still own all the ETFs. Unit trusts I'm not so sure of.

 

Which platforms were you thinking about? Nevermind, saw the title now :D

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