If you’re new to investments and looking to start your savings journey, a tax-free unit trust is the ideal investment product to get you started. Tax-free unit trusts were created under the legislation passed in 2015 by the National Treasury, to encourage South Africans to save. Similar to a standard unit trust, tax-free unit trusts allow you to invest in top performing companies and have the potential to generate greater returns than an ordinary bank account over the long run. Unlike a standard unit trust, you don’t pay tax on interest, dividends and capital gains, which means your investment has the potential to grow faster.
You can kick-start your journey by investing a minimum of R500 per month, or a lump sum minimum of R10 000. Always remember that standard and tax-free unit trusts are a medium to long-term investment, so give your money time to grow.
How It Works
A unit trust gives easy, cost-effective access to blue chip companies via shares, property and bonds, which are not usually available to direct investors with relatively smaller amounts to invest. The fund manager is responsible for diversifying your investment to protect it from being too exposed to a potential fall of a single asset.
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Both tax-free and standard unit trusts are a popular choice for investors who want access to blue chip shares and bonds, which are not cost-effectively available to direct investors with relatively small amounts to invest.
You can now transfer all or part of your tax-free investment between product providers. For more information on tax-free unit trusts or transfers, contact us.View our list of Tax-free Unit Trusts.
Parents are able to invest tax-free on behalf of their children. But, by doing this, you’ll be using part of the child’s annual and lifetime contribution. It is important to note that if you wish to open a tax-free savings account for your child, the child must have a bank account.
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