Whether you are saving for a specific goal, education for yourself or a loved one, securing income for

your retirement or
just to have some emergency funds for those rainy days, there are many savings and investment options to choose from.

Liquidity - How easily can Growth - How much your Risk - How predictable is your Contribution - Contribution Flexibility - Ability to stop and Costs - What you will be Investment Term - How long Tax Rates - How your returns Bottom Line
you access your money when money could increase through investment’s growth likely to be? commitment required. start contributions. charged for the management of your money must be kept in the are taxed.
needed. interest. your savings or investment. investment.

Bank Account - You can withdraw your money at Your day-to-day transaction account Low risk - if invested with regulated None. You can also lose motivation Full. There is no plan and therefore What you will be charged for the No fixed Term. Any interest earned is fully You can save enough to reach your goals, but you would have to save much
Keep your monthly any time. usually doesn’t provide any banks. and spend your money at any time. no commitment. management of your savings or taxable in excess of R23 800 higher contributions each month to make up for the lack of other inflation beating
savings in your significant interest. You can easily use your money as it investment. (under 65 years). growth - that’s less cash in your pocket. This type of savings option is only useful
traditional bank isn’t separated from your day-to-day for short term saving (less than 5 years) or for emergency funds.
account. spending money. Or R34 500 (65 and older). As per
current regulation.

32 Day Account - You can withdraw any amount 2% - 3% below inflation. Low risk - if invested with regulated Contributions can start from as little All contributions can be made when There are no fees or commissions, No fixed Term but subject to your Interest fully taxable in excess of This option allows slightly better growth with high flexibility, but 2-3% is well below
Transfer your monthly of money but must wait 32 days banks. as a minimum of R100 per month. and where you want. except for cash deposits exceeding notice period for access. R23 800 (under 65 years). inflation, any growth below inflation erodes the purchasing power of your money,
savings to a 32 day before you can receive it. Premiums are product supplier R5 000 in any calendar month. which is a waste of your saving discipline! Only useful for short term saving (less
notice account. dependent. Or R34 500 (65 and older). As per than 5 years).
current regulation.

Tax Free Savings You can withdraw your money at Returns will depend on the
Account - Deposit any time. investment vehicle and funds
monthly savings into chosen.
a TFSA.
Without the tax drag, it is expected
that the investments should in the
medium to long term yield returns in
excess of other investments where
the returns are taxed. For short term
the returns may however be limited.
Risk is dependent on the type of
the underlying investment funds and
term held.
Contributions can start from as little
as a minimum of R150 per month.
Premiums are product supplier
dependent.
Complete flexibility with no
penalties for stopping or starting.
Tax-Free savings can invest in
generally any assets types,
examples are bank deposit
accounts, Unit Trust funds and/
or Funds through a share trading
account. Each will have its own
associated costs.
No fixed term. Medium
to long term recommended.
100% tax free. You pay no tax on your investment growth or when you withdraw your funds. You
pay no tax on dividends, capital gains or interest. Paying no tax on returns entails
potentially higher investment values.
Tax Free investments can be applied to all investment terms. However, to benefit
from the ‘Tax-Free’ growth, the longer the term the greater the returns (Medium to
Long term).

Unit Trusts - Invest 100% liquid.
savings in unit trusts.
However, to enjoy the benefit
of compound growth, it is
recommended as a medium to
longer term saving vehicle - 5 years
plus.
Historically returns exceeded
inflation rate over medium to long
term.
Higher risk depending on type of
unit trust fund.
Managed by experienced asset
managers. Unit values move in line
with stock market which is volatile.
You can contribute a minimum of
R500 per month. Single premium
and ad-hoc payments are also
allowed.
No penalties: stop or start your
investment at any time.
Costs generally applicable in
market:
Equity funds: Initial charge max.
5.7% incl. VAT. Management fee
1.14% - 1.17% p.a. incl. VAT.
Gilt & income funds:
Initial charges max 1.14% incl. VAT.
Management fee 0.86% p.a. incl.
VAT.
Money market funds:
No compulsory or initial
charges. Annual management fee
0.57% p.a. incl. VAT.
No fixed term. Medium to long term
recommended. For higher return,
five years or longer.
Dividends (excluding foreign Unit trusts are an ideal investment option when you are looking at convenience
dividends that are subject to a and medium to long term savings.
different method of taxation) are
taxed at 15%. Interest fully taxable Generally a medium to long term outlook (5 years or longer) is recommended for
in excess of R23 800 (under 65 equity fund investments while cash and income type portfolios are more suitable
years). for short term investing.
Or R34 500 (65 and older).
Proceeds on sale of units may be
subject to capital gains tax (no CGT
on build-up) with annual exemption
that applies on the first R 40 000
currently.

Endowment - Use The investor is allowed one
savings to invest in surrender and one interest free loan
an endowment. (capped at capital invested plus 5%
growth per year) in the first 5 years
or any subsequent restriction period
where premiums are increased by
more than 20% in any one year.
Returns are dependent on
performance of the particular
investment strategy selected. These
may outpace inflation in the long
term.
Low to High.
Depends on the fund type or fund
strategy that you choose.
Can contribute monthly or a single
premium. Premium paying can be
committed or flexible.
Can stop and start, but may
incur costs in case of committed
contributions. Transaction fees may
apply in some instances.
Generally, the following fees may Generally Endowments have a 5-15 Growth in the investment funds of It’s a five-year investment savings vehicle that can offer income and capital gains
be applicable: year investment term. Endowments are taxed at a flat rate tax advantages to those who are in the highest tax brackets.
- Admin fees of 30% for individuals.
- Asset management fees Beneficiary nomination can lead to potential savings on executor’s fees (up to
- Adviser fees The proceeds are payable after 3.99% of fund value). Endowments may also offer solvency protection Most useful
tax. Thus tax-free in the hands of the for medium term savings (between 5 and 15 years).
investor.

Shares - Use Liquidity dependent on supply and Expected to outpace inflation but Medium to high risk. None, you can invest as and when Complete flexibility. After deregulation brokerage No fixed Term. Dividends (excluding foreign Managed portfolios allows you to select your own spread of equity shares.
savings to invest in a demand and on current desirability probably at a higher risk exposure you choose but normally at a higher charges are fully negotiable. dividends) taxable at 15%.
managed portfolio of of the shares being sold. especially over shorter terms - very Share values move in line with stock entry level. The sliding scale used before Or you can buy into fully discretionary portfolios setup by the brokerage.
shares. volatile. Dependent on performance market which is volatile. Bigger deregulation is still used as basis. Profits on resale may be considered
of particular shares on stock spread of shares could reduce risk. income if held for less than 3 year Your portfolio of shares should be both actively managed and well diversified
exchange. Charges apply to purchases and Safe-haven option. Capital gains to lower the volatility. Most useful for medium - long term savings (longer than 5
sales Marketable securities tax realised may be subject to CGT as years)
(MST) of 0,25% & is payable on all per prevailing annual exemptions.
purchases.

Retirement Not liquid. As per any other savings, it all Medium risk. From as little as R250 pm for You are allowed to stop and start Generally, the following fees may Varies according to age of investor. Growth tax-free (in investor’s hands Retirement Annuities makes it easy and attractive to start saving for retirement with
Annuity - Use depends on term and selection of committed savings and R500 for contributions. be applicable: The minimum maturity age is The first R 500 000 of any Lump small monthly amounts. They are generally long term investments, where all the
savings to save for You can only access Retirement underlying assets/ portfolios and Could be higher risk depending on flexible savings. - Admin fees 55years. No maximum maturity Sum taken at retirement is taxed returns or growth in the funds are Tax-free.
your retirement in an Annuity products from age 55+ general market conditions. portfolio choice. Values fluctuate With committed savings you have - Asset management fees age. at 0%, the balance will be taxed
Retirement Annuity. (or earlier in the event of ill health, in line with underlying assets. limited opportunities to restart and - Adviser fees according to a scale. Tax deductibility is allowed for all or part of the contributions. There is potential
death or disability). Protected against creditors in event may incur cost and charges for tax implication on value > R 500K as well as income drawn from the 2/3 Most
of insolvency. breaking the commitment. Only a max of 1/3 may be taken useful for long term savings.
in cash at retirement or vesting date,
With flexible savings you have the remaining 2/3 must be invested
flexibility to restart at anytime. into a compulsory annuity.

Disclaimer: The information is based on legislation and product rules as at 1 March 2016. While every reasonable effort has been made to ensure the accuracy of the information, before making any financial
decision based on the information is taken, you should speak with a financial adviser to confirm the advantages, disadvantages and tax implications of each of the different savings and investment options.