MyMoney Online, Make Money Mondays

Success! First-time savers open 1/3 of all Tax-Free Savings Accounts

South Africans do not save enough.

There are many reasons for this; one of them being the disincentive of paying tax on investment returns.

For this reason, Treasury introduced tax free savings accounts on 1 March 2015.

All proceeds (dividends, capital gains or interest) of investments in these accounts are tax-free.

After four months 35 384 South Africans opened an account.

A third of these accounts were opened by first-time savers, which is exactly what Treasury had in mind with this innovation.

Most of the money – about two thirds - is going into shares.

This is encouraging, because it's the best way to get the most benefit from these accounts.

The Money Show’s Bruce Whitfield interviewed Stuart Theobald, Chairman of Intellidex, about the success of these wealth-boosting investment accounts.

Scroll down for quotes from the audio below.

After four months just over 35 384 accounts have been opened. This is pretty good!

Stuart Theobald, Chairman of Intellidex

Half of tax-free savings accounts came in a “life policy” wrapper.

Stuart Theobald, Chairman of Intellidex

About 6000 accounts are unit trusts.

Stuart Theobald, Chairman of Intellidex

About a third of the accounts have been opened by first-time savers. This was exactly what Treasury had in mind. This is a really good result.

Stuart Theobald, Chairman of Intellidex

We excluded the big banks from our research as they weren’t willing to share information.

Stuart Theobald, Chairman of Intellidex

Most of the money is going into shares – about two thirds. This is encouraging, because this is how to get the most benefit from these accounts.

Stuart Theobald, Chairman of Intellidex

Investing R30 000 a year can turn into millions in the long-term.

Stuart Theobald, Chairman of Intellidex

For more information on tax-free saving go to www.savetaxfree.co.za.

Stuart Theobald, Chairman of Intellidex

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