Presented by Coronation

The early bird catches the compound returns

Just as early risers are able to make the most of their days, the same goes for those who invest tax free. The earlier you start, the more you can make of it.

Now is the time to take full advantage of a tax-free investment (TFI)

The new tax year began on 1 March, and each tax year you get a valuable perk from government to encourage you to save – an annual allowance of R36,000 that you can invest tax free.

In a TFI, you pay no income, dividend or capital gains tax on your investment returns, which boosts your future capital value.

The sooner you start investing tax free, the sooner your money can start compounding

If you want your money to work as hard as it can for as long as possible, an optimal solution is to invest in a market-linked option such as a Coronation TFI.

Your money is exposed to growth assets such as shares, bonds and listed property, which can protect it from the eroding effect of inflation and grow it over time through the power of compounding.

Thinking long term is easier said than done and many investors are not patient enough to experience the full benefit of staying the course.

Wise investors know that the more patient you are, the harder compounding will work for you.

It’s easier to stay committed if you choose a multi-asset class fund

If you make your own investment decisions, you may find it difficult to make consistently good decisions over time.

A simple, manageable solution is to invest tax free in a multi-asset class unit trust fund, such as the Coronation Market Plus Fund or the Coronation Global Managed Fund.

They are managed by skilled investment professionals who identify the best long-term opportunities for you across different asset classes.

You can access your money but it’s a pot of savings best left invested.

When you invest tax free, you can withdraw your money anytime. But you can’t ‘replace’ it with a new investment.

So be mindful that all amounts you invest count towards your annual (R36,000) and lifetime (R500,000) tax-free limits, regardless of withdrawals.

A TFI is money you ideally want to leave invested for as long as possible, as its one of the best ways for South Africans who have extra money to save outside of their retirement fund to build up a nest egg for the future.

So, get going early with investing tax free this new tax year.

You can start investing via a monthly debit order from as little as R250 with Coronation or make lump-sum investments from R5,000 to R36,000.

If you have an existing tax-free savings account with a bank, you can switch to a long-term TFI at no cost.

To find a TFI that suits your needs, speak to your financial adviser, or follow Coronation’s simple online investment process here.

Coronation is an authorised financial services provider.

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The early bird catches the compound returns