Tap into tax benefits this February

The end of the tax year in February presents an opportunity to evaluate the tax efficiency of your financial plan. With many competing financial priorities in the current economic climate, as well as the pending changes to the retirement fund system, you may be wondering whether maximising the annual tax incentives still makes sense. Carla Rossouw unpacks the benefits of retirement annuities and tax-free investments, looks at how much to contribute, and discusses the trade-offs to consider when choosing a product.

Incorporating retirement funds (pension funds, provident funds and retirement annuities (RAs)) and tax-free investments (TFIs) into your long-term investment strategy can improve your chances of retiring comfortably and increases the amount of financial flexibility you have before and at the point of retirement. 

For the purposes of this discussion, we look at RAs and TFIs. While there are tax benefits associated with both, the benefits are structured differently, and the product rules and restrictions are quite distinct. Depending on your goals and objectives, there may be a place for both products in your investment portfolio. A good, independent financial adviser can help you understand the benefits and trade-offs and decide which products are best for your circumstances. 

Different products have different advantages and disadvantages … and tax efficiency cannot be looked at in isolation – you also need to consider each product’s suitability and flexibility. 
Focusing on retirement annuities 

Read full article on https://www.allangray.co.za/latest-insights/personal-investing/tap-into-tax-benefits-this-february/

February 07 2024 By Carla Rossouw - Allan Gray