Presented by Coronation

Invest early in this new tax year to get the most out of a Coronation tax-free investment

Good things come to those who don’t wait to invest tax free

Did you know that the South African government offers a tax break with no strings attached to encourage you to save?

You are allowed to invest up to R36 000 each tax year tax free! With the new tax year upon us, make the most of it by investing sooner rather than later.

When investing, we believe that investors should prioritise taking advantage of their annual tax-free investment (TFI) allowances as early as possible so that they can reap the benefits of compound growth.

It is what we call a first in, last out strategy for tax-free investing.

The power of investing tax free over the long term

Imagine investing the maximum amount (R36 000) annually in a TFI on behalf of your child from birth until the lifetime limit of R500 000 is reached in the year that they turn 14.

The money then remains invested for four decades until your child reaches retirement age (65), allowing the investment to benefit from compounding of returns that are not reduced by taxes.

The end result, given certain assumptions*, is an investment worth more than R17 million in today’s money, which is enough to fund a comfortable retirement income of more than R80 000 a month, again in today’s money.

*We assume a real return of 6%. Historically, Coronation Market Plus provided a real return of 8.9% since inception (as at end January 2022). This example is for illustrative purposes only. Future returns are uncertain and actual outcomes may differ.

Hypothetically, your child would never have to contribute to retirement while working, effectively freeing up 10% to 15% of annual income that would normally have been required to fund retirement income if you start contributing in your early 20s.

Get in early and get the most out

To get the maximum benefit from investing tax free over the long term, we believe that the optimal choice for most investors is a growth-oriented multi-asset class fund such as Coronation Market Plus or Coronation Global Optimum Growth.

Multi-asset class funds simplify investing as you can leave the asset allocation decision-making to skilled investment professionals.

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

Remember that if you have an existing tax-free savings account with a bank, you can switch it to a Coronation TFI at no cost.

The new tax year is upon us. So get in now and get the most out by finding the right fund for you to kickstart your Coronation TFI here or speak to your financial adviser.

Coronation is an authorised financial services provider.

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Invest early in this new tax year to get the most out of a Coronation tax-free investment