2020 was a tough year for everyone and in 2021, we need to tighten our belts even more. How can we make our money work for us and save tax? Christo Lineveldt, Investment Specialist at Coronation, chats to Gareth Cliff about why a tax-free investment might be exactly what you need. The tax year ends on 28 February. So, you still have time to take full advantage for this year.
WHY INVESTING TAX-FREE IS A NO-BRAINER NOW MORE THAN EVER
Coronation Fund Managers
Living through a global health and economic crisis has taught us not to take anything for granted.
Many South Africans have suffered deeply, but one thing that can’t be taken away from us is how we
respond in times of crisis. Focusing on doing the best we can with what we have, and planning ahead
to secure our futures, is something we can do to regain control of our lives. And investing your hard-
earned money tax free is an opportunity to do just that.
The tax year ends on 28 February. So, you still have time to take full advantage of the valuable perk
offered by government to encourage us to save – an annual allowance of R36,000 that can be
invested tax free.
When you invest tax free, you pay no income, dividend or capital gains tax on your investment gains,
which boosts your realised investment return.
In this low interest environment, its better to invest tax free than to save tax free
You could choose to save tax free through a bank, but then your money can only ever earn a
predictable level of interest. And given how low interest rates are currently, you have a better
chance at beating inflation and growing your money over time through investing in a market-linked
option, such as a Coronation Tax-Free Investment. Your money will be managed by experts and
exposed to assets with a higher expected rate of return, such as shares, bonds and listed property. It
gives you the potential to grow your wealth over time through the power of compounding. While
returns are not guaranteed, history has shown that long-term investors are better off investing in
the stock market than saving in a bank account.
The smart approach is to invest for the long term
You want your money to work as hard as it can for as long as possible and be exposed to the best
growth potential over time. But thinking long term is easier said than done, especially during a global
crisis. It’s sometimes hard to stay committed to future goals and many investors do not invest for
long enough to experience the full benefit of staying the course.
It’s easier to stay committed if you choose a tax-free multi-asset unit trust fund
If you make your own investment decisions, you may find it difficult to make consistently good
decisions over time. The key to sticking to your financial goals over time is to take a simple,
manageable approach.
A solution is choosing a tax-free multi-asset unit trust fund, such as the Coronation Market Plus Fund
or the Coronation Global Managed Fund. They are managed on your behalf by skilled investment
professionals who identify the best long-term opportunities available across different asset classes.
A multi-asset fund has a broader mandate and more tools at its disposal with which to achieve your
desired result.
Unrestricted access to your money
When you invest tax free, you can withdraw your cash whenever you like. But you can’t ‘replace’ the
money you withdraw with a new investment. So be mindful that all amounts you invest count
towards your annual (R36 000) and lifetime (R500 000) tax-free limits regardless of any withdrawals
you make.
So, take control of your future and invest tax free
\You can start investing via a monthly debit order (from as little as R250 with Coronation) or you can
make lump-sum investments from R5 000 to R36 000. If you have an existing tax-free savings
account with a bank, you can switch it to a tax-free investment at no cost.
To find a tax-free investment fund that suits your needs, speak to your financial adviser, or click here and follow Coronation’s simple online investment process.
Coronation is an authorised financial services provider.