SPECIAL MENTION: TOP TAX-FREE SAVINGS ACCOUNTS

A TAX-FREE SAVINGS

account (TFSA) is an important component of any investment portfolio. Apart from using TFSAs for the obvious benefits of receiving greater returns because you’re not paying tax, they can be used as a top-up to an existing portfolio or to diversify it, for example, to increase exposure to offshore investments or resources, or to save for a long-term goal, such as children’s education. Stockbrokers are key providers of TFSAs and many have put in much effort to create a compelling offer for first-time investors to get involved in the stock market – and have done so even though profit margins for brokers on such accounts are extremely thin endeavours at best. with We support a prize for those those we think have created the best offerings. Investors can save up to R33,000 a year in a TFSA with a lifetime limit of R500,000 — with all gains free of tax. TFSA regulations do not allow direct investments in listed equities but do allow for access to the equities market through exchange-traded funds. Such funds invest in a portfolio of shares way to and get exposure represent to a cheap diverse equity investment. Equities tend to be more risky than alternatives like bank accounts, but the evidence is clear that in the long run they outperform. Stockbroker accounts are also the most tax efficient, allowing investors to avoid capital gains tax and dividend tax. Because of the restrictions, most brokers offer the same range of ETFs. The top tax-free savings determined feedback. opened broker costs, ease rate account an Clients the account of solely opening broker provider who from with on have client the their is account, service levels. range of products and Rand Swiss is this year’s winner of the award, moving up from third place last year, with Unum Capital second and EasyEquities third. Stockbrokers have largely kept in mind the overall goal of getting more first-time investors into the market and have kept prices extremely low. While low margins and high volumes are the core business model for stockbroking generally, with TFSAs this is even more of a factor.