When your tax-free returns ghost you…

South Africa is going through a lot right now. Eskom has finally conceded that loadshedding is going to be worse before our energy security crisis gets better; and the country’s economy is sluggish in shaking off the multiple blows thrown at it, COVID-19, the far-reaching impact of unemployment and increased cost of living. For the South African investor, there are limited options available when it comes to investing locally.

The diversity of your portfolio isn’t limited to having access to a multitude of asset classes or varying investment vehicles but also ensuring that these products work for you – beyond the cycles and market sentiments.

Perhaps the value lies in looking within some of South Africa’s local investment and savings vehicles and considering the likes of a Tax-Free Savings Account (TFSA).

Introduced in 2015 to encourage household savings, the current perception around TFSAs is that they are for the investment novice, newly minted professionals or those who’d like to have some money for a rainy day, tax-free. But this is a myth. A TFSA should, in fact, be a serious consideration for all types of investors – including the astute and experienced. It is an investment vehicle that can be considered as a base product to maximise this tax advantage provided by government. Equally important is understanding the Ts and Cs, fees and the transparency of a TFSA to ensure the highest net return.

After having spent hours conducting research, could you confidently say that you understand the returns, the fees, and the value you’ll get from this investment besides its tax-free appeal? Or that you understand the cumulative impact of these hidden costs on the value of your TFSA in the long-term?

In launching our Tax-Free Savings Account, our approach was simple: we wanted to develop a product that investors can include as part of a holistic investment approach where they can benefit from all the tax breaks available to them, and ensure that even the simplest investment vehicle, like a TFSA, continues to enhance their investment portfolios. But the benefits of a tax-free savings vehicle is negated if investors are paying what they would have saved on taxes, in fees. So, to align with the ultimate objective of encouraging investors to save, we charge zero investment fees on our TFSA. We’ve also made it easy for investors to switch their TFSA from another service provider to ours.

By far the biggest benefit, however, is the market-beating return that our tax-free savings product offers. With a minimum effective annual return of 10% per annum, integrating a TFSA into your investment portfolio is a no-brainer. What’s more, we’re so confident in the performance of the underlying assets of this offering, that we’re guaranteeing this minimum return until 29 February 2024. And we are confident that these underlying assets will continue to meet or exceed our targeted returns thereafter.

Ours is an account that’s structured using an endowment policy issued by Fedgroup Life Ltd. and is invested in a bespoke selection of underlying funds and a range of cash and debt instruments. In addition to a market-beating return, the Fedgroup TFSA also offers investors additional benefits. In the event of the investor’s death, named beneficiaries receive the proceeds faster and the TFSA doesn’t form part of the investor’s estate for the calculation of executor fees. These unique benefits help investors get the most out of this product and that’s what we want for our investors – the protection and preservation of their money and investments, a sustainable, diverse portfolio and market-beating returns that don’t just look good on paper but also enhance your investment gains.

We put our clients first in a global economy that’s unpredictable, a local one that’s worrisome, and an industry that frustrates through fees, fine print, and convoluted terms and conditions.

There is no reason to make TFSAs so difficult. They are investment vehicles that can help bolster consumer confidence when it comes to investing and enable investors to structure portfolios that deliver and improve with time while serving as an entry point for many who are looking to secure their financial futures.

DOWNLOAD THE FEDGROUP APP TO EFFORTLESSLY MAXIMISE YOUR TAX-FREE ALLOCATION >>