Retirement Annuity (RA) vs Tax Free Savings Account (TFSA): What's Best for You?

[@mangensukilufya1233]

Hi. Thank you. I am a black African man. We Africans avoid talking about money. When one initiates the talk he is labelled as greedy. I have always been curious to learn a bit about a lot. So i am not a specialist. Tax free saving is good if you have small amount of money because you are limited to 36000R saving per annum whereas RA is function of your annual income and up to 27% is allowed. Now if your annual income is R1000000 one can put 270000R per annum in RA which is significant but wth tax free whatever your annual income you are only allowed to put 36000R per annum. The return is quiet significantly different. The other positive aspect of RA one learns discipline and sacrifice. Lastly the tax deduction is another incitive provided that the tax return is reinvested in any sort of investment either in bond or in a Tax free investment or even another RA. If one gets the tax return and splashes it on travelling it is just what i call financial illiteracy. I am sharing this video with my children. Well done. Siyabonga kakhulu mama❤😂

[@TalkingMoneyWithNozi]

The best is to have both a pension fund and TFSA because they offer unique benefits. Most people already have a pension fund from their employer so having an RA is not necessary. Keep in mind that majority of South Africans will never be able to put 27% of their income into a pension funds and they will never be able to invest the full R36 000 into a TFSA. If someone already has a pension fund, they must invest in a TFSA also even if they won't be able to invest the full R36K every year

[@zanelenxumalo5057]

Agreed 💯 taking advantage of both brought

[@sabelonkwanyana9294]

Fees as well to consider when deciding between the 2.

[@tamia7231]

Nozi please make a video about good and bad credit 😢😢how to better your credit score,and how to rebuild bad credit

[@TalkingMoneyWithNozi]

@@tamia7231 ok

[@mountaingoatboy903]

Hi Nozi - awesome video! Thank you! When you say @5:11 that a work pension would probably be more cost effect to contribute to instead of a private RA - can I ask what that means? I'm currently trying to decide whether to contribute extra to a work pension fund (its a "defined benefit" pension fund which my employer already contributes to - so any extra contributions on my side would not be matched) instead of contributing to an RA. A friend said to me I should rather contribute extra to an RA and "not have all my eggs in one basket" in case something happens with the work pension fund?

[@TalkingMoneyWithNozi]

@@mountaingoatboy903 all retirement funds charge a management fee for managing your investments. If you do it via your employer, you get a lower fee because you share costs with other employees contributing to the same fund. But with an RA you are on your own. There is no harm in having an RA, but not because your pension fund will disappear because that is unlikely to happen

[@mountaingoatboy903]

@@TalkingMoneyWithNozi Thank you so much - I didn't even think of that!

[@AuroranPhoenix]

Thank you for your excellent content Nozi...instant subscriber. Quick question, if you reinvest the dividends of your TFSA back into your TFSA, do those reinvested dividends count toward your 36K limit?

[@TalkingMoneyWithNozi]

No. Only DEPOSITS from you count

[@AuroranPhoenix]

@@TalkingMoneyWithNozi tha KS so much honey 🍯

[@MaVbets]

Hi I really like the way you explain things so can you please do the video on two pot system as well 🙏

[@TalkingMoneyWithNozi]

@@MaVbets I posted the video last year. Watch it here kzbin.info/www/bejne/nZ6Tn3mMf66HjcUsi=BeBtyvhazlhqWVzk

[@MaVbets]

@@TalkingMoneyWithNozi Dankoo got it and I really think an updated video will be very helpful to everyone especially before the 1st of September.

[@angelakyt]

Thank you 💚 Please could you make a video about best route to take with re-investing RA, once reaching 55yrs old , and still able to contribute monthly

[@TalkingMoneyWithNozi]

You can still contribute to an RA even after you reach retirement age

[@justart2737]

The tax free savings account being 36k a year is just crazy to me. At least 80k-100k.

[@nthabisengrawu706]

What if you have an RA and now you end up getting a job that offers RA or Provident Fund, what will you do with your current RA?

[@TalkingMoneyWithNozi]

You can pause contributions to your RA if you like

[@nthabisengrawu706]

@TalkingMoneyWithNozi Really. Won't that cause termination of your RA?

[@mmz438]

Hi Nozi, Thanks for the informative video. I hear that you say TFSA allows investing in Equities, however,I noticed that EasyEquities does not allow single Equities in the TFSA . And so, one is forced to buy ETFFs instead.

[@TalkingMoneyWithNozi]

You can buy Exchange Traded Funds. They are baskets of equities

[@mmz438]

Yes, that's exactly what im saying. No individual stocks in TFSA but only ETFs. ​@TalkingMoneyWithNozi

[@TalkingMoneyWithNozi]

​@@mmz438 you are not allowed to buy individual stocks inside RAs and TFSAs, you can only gain exposure to equities if you buy ETFs or Unit Trust. This is not a flaw, but a feature of TFSAs and RAs

[@Tiieee1]

Hi Nozi Are the steps in order of importance? Do I need to have an emergency fund before I pay off my high interest debt?

[@TalkingMoneyWithNozi]

Yes. Build savings first because what if an emergency happens before you pay off your debt, what will you do?

[@Tiieee1]

Thanks for the response

[@kalianmunsamy8257]

Hi nozi , great video. Doing a great job. Would love to see a video on " retiring on dividends " . Is it possible to reach financial independence on dividends. Have u met or know of ppl that live if dividends to sustain there life. Regards Kalian

[@TalkingMoneyWithNozi]

Hi, I know a U.S KZbinr that lives on dividends Just search for Dividend Investor and watch his videos

[@agnesnhlapo8579]

Hi dear,how do i transfer retirement policy from our traditional companies to those in easy equity?

[@TalkingMoneyWithNozi]

@@agnesnhlapo8579 what kind of policy?

[@agnesnhlapo8579]

@@TalkingMoneyWithNozi retirement policy to syngia

[@ricohippolite3137]

Hi nozi. My tax free investment is maxd out every year.(36kp.a) Wat happends if i invest in tfsa? Will i b exempt from tax

[@TalkingMoneyWithNozi]

@@ricohippolite3137 if you invest in TFSA, you are exempted from all Capital gains tax (CGT),and dividend withholding tax (DWT) for domestic (South African) ETFs.

[@ricohippolite3137]

@@TalkingMoneyWithNozi iv been investing since it began in 2016 with old mutual. Iv recently got on to easy equities. Since my funds already going in old mutual tax free fund il just have to stick with that 1 and use the normal za easy equities acc not tfsa on easy correct? Cz my 36k p.a gets used up on the old mutual fund. So it wouldn't make sense to use the tfsa in easy eq right?

[@calvinthesilva]

Am I right in saying, generally, you should max out your TFSA annual limit AND THEN increase contributions to your RA?

[@TalkingMoneyWithNozi]

@@calvinthesilva correct

[@ReubenvanderMerwe]

Pay less tax tfsa, is better when you're annuity matures you going to pay tax on your annuity