Oh for the world to be free of bureaucracy like taxes, so we could just enjoy life and spend our savings travelling the world…
Sorry for us, we have to pay our taxes, that’s for certain. But ever thought why tax existed within your savings account? Why couldn’t all savings accounts be tax-free so that we can reap the benefits, and use our savings to indulge in our wanderlust with no cares in the world?
That would be pretty awesome! I guess that may be pipe dream but at least there are some options that are tax-free and I’ve asked the team at 1Life for some assistance regarding these.
While the finance experts at 1Life helped us to compile the three “must-knows” about tax-free savings accounts, I’ve thrown in my latest 2 favourite destinations in South Africa to inspire your wanderlust. Since all my savings go to funding my travels, the more I save on tax, the more I have to fuel my wanderlust.
1. They are more than just savings accounts
Tax-free savings accounts are not limited to low-interest-earning savings products only (Yay!) and the great thing is that most investment companies have launched new tax-free investment products. This means that you can invest for the long term and earn decent returns, tax free. Saving you lots of time and money. More savings = more travesl (for me at least!) We like that.
2. Be aware as you were probably not paying that much tax anyway…
Did you know that usually the first R20k of interest that you earn on savings in a normal savings account is tax free? AND the first R30k of normal investment growth is also free from capital gains tax. If you have started or have other investments, know that it takes a long time ‘til your interest will grow to these numbers and only after that will you start to get the benefits of a tax-free savings account.
3. Next step?
To reap the best benefits from tax-free savings accounts you need to be in it for the long-term. You also shouldn’t use them for your day-to-day savings.
It’s easiest to speak to a financial planner, do a budget and your own research and once you are comfortable with all the aspects of your financial planning, you can decide how best to save to fulfil your wanderlust and remember that you have up to R30k that you can invest annually in your tax-free investment. Patience and budgeting is key!
Happy saving and happy travels!
This post is sponsored by 1Life Insurance to educate on you on common South African tax and investment. Visit them to get reliable information on life insurance online and get a quote for Life Cover online.