How to be more tax savvy

If, like most of us, you would like to see more return in your account and less in the hands of the tax man, it is important to engage with the details to understand how you can maximise tax breaks.

A famous saying attributed to Benjamin Franklin reminds us that there are only two certainties in life – death and taxes. While we have little control over the first, we can be quite strategic about the second, with many legal ways to reduce your tax bill and boost your investment account.

While you have to accept that you will have to pay tax at some point, the South African government has put numerous incentives in place to encourage us to invest for the long term, while saving on our tax bill. These incentives can be very attractive, particularly when you look at how the value compounds over time.

So whether you are looking to reduce your current tax bill and save for your retirement, or reduce your future tax on investment return, there are government-approved products to help you achieve your goals. Remember, every little bit counts when saving for the long term.

Tax has a significant impact on your investment return
With so many products to choose from, it’s important to understand the tax advantages on offer and make strategic choices, either on your own, or with the help of a good, independent financial adviser.

Products you can choose to invest in include unit trusts, endowments, retirement annuities and tax-free investments. You may also be invested in an employer-sponsored retirement fund, such as a pension or provident fund, by virtue of your employment.

When deciding between investment products you need to consider various factors, including:

Your age
How much risk you can stomach
Your current and future financial needs
What kind of access you want to your investment
Tax efficiency

Find the article here: https://www.allangray.co.za/latest-insights/personal-investing/part-1-how-to-be-more-tax-savvy/ 

November 26 2020 By allangray.co.za Personal Investing