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Online Share Trading

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TFSA - ETF's

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Blik
Super Contributor
Simon, any idea at this stage on whether we need to claim back the dividend tax, or will the ETF be cogniscent of the TFSA account, and not deduct dividend tax? Just curious.
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Barend1206
Contributor
You not taking capital gain into account. My TFSA is up almost 2% since I opened my account a month ago and no divs received yet. No WHT of 15% applicable anyway
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geordie1
Super Contributor
I am positive that you will not have to claim back div tax-but please get that confirmed for your own peace of mind.stu
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Rams
Super Contributor
The new tax-free products provide shelter from income tax on interest, dividend tax and capital gains tax. BizNews
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Rams
Super Contributor
and dividends tax is probably all you save with the TFSA. You have already have about 24000 interest allowance and 30 000 pa CGT allowance. If you reached that max, then maybe but some of the stats show that the 30 000 in a RA product probably work out better.
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geordie1
Super Contributor
agree in year 1-in year 20??
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kwagga
Super Contributor
..and this is how you register on this site My Account\Product Registration\TFSA Registration tick the box an Apply. Couldn't be more simpler
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Rams
Super Contributor
works out even better for RA than TFSA in longer term. Remember, RA you get relief on contributions, on TFSA you get relief on "growth". in a RA, i get back about 12000 on my 30000 per annum. Deffered tax yes, but 12000 per annum now could also grow elswhere faster than being stuck in a TFSA. The TFSA is of no use to the poor guy..he does not save or earn enuf to worry about tax. It may be of use to the well off guy who has maxed his RA, maxed his savings thresh-hold and paid off his bond.
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samoa
Super Contributor
Rams in RA you got no control over bad investments. However I see the advantage in the exposure of the kids to the JSE etc. Imagine your 9year old discussing his/her investments performance with whoever,when he/she is 16yrs old,only 5 years from now?I believe these accounts must be promoted for the kids.Otherwise Oupa will buy another red plastic firetruck instead of making a sensible investment in the kid both in money and in education. If I had exposure to the JSE on age 16, it would not be me typing this comment, because I wouldn't be here. And that is also applicable to the how to get rich thread.It is all about knowledge and that scarce commodity,common sense.
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samoa
Super Contributor
To take it further.With RA they warn you not to withdraw more than +-6% and then you also must not live to long otherwise your capital will dry up.JSE average for past decade or two:13-15% plus. what happened with the difference? I believe you can outperform the tax benefit of a RA contribution.
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Rams
Super Contributor
agree with the savings aspects etc, but the only tax benefit possibly of the TFSA is div tax, even if started at 5 and cashing out at 20, as you still in university and will still be below the tax threshold....maybe a real carrot to dangle to entice savings is tax rebate on premiums or lump sums in savings accounts...and no tax if kept for like 15-20 years.
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SimonPB
Valued Contributor
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Barend1206
Contributor
Can you take out a RA for a child? Should you not be earning a salary or other income and be of a certain age? You can't do life insurance on a child until they are 18.
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Siener
Contributor
Recent studies have shown that Property ETF in tax savings account would PROBABLY produce the best risk-adjusted long-term returns (bearing in mind that REIT distributions are normally fully taxable). Crazy thing about REITs and tax free savings account is that a company's net profit is effectively taxed NOWHERE!!! (normally pre-tax profits are distributed to linked unitholders, who pay tax, but now no tax is payable!!). If you include family members, you can create vehicle of a few million Rands that pays 30% TAX-FREE yield in 15years plus.
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Siener
Contributor
Listed Property has consistently beaten every other asset class the last 15 years or so. It has enabled me to retire in my forties a very rich man. Now the tax free savings account enables you to enjoy these returns TAX FREE!! For your children, such an investment (Property ETF in TFSA) is a no-brainer. RA's won't be applicable until they have a job, which could be in 20years plus time. By that time, they'll be multi-milionaires in TFSA.
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Rams
Super Contributor
During the next correction(June to August), i will be buying an ETF in a TFSA, will invest the max allowed per annum up to the lifetime max. Simply becos i have maxed out my tax rebates in other products.
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geordie1
Super Contributor
agree.I was also lucky enough to invest in listed property here and overseas in the last 20 years.do you know of a listed property tfia because that would get my vote and my chidldrens money
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Rams
Super Contributor
3. Are fund managers allowed to use hedging instruments in unit trusts in a tax-free savings account wrapper? Rowan Burger, executive: Large Corporate Segment (Momentum) says basically each license has investment rules. Unit trusts and life companies have these. The principles are that derivatives can be used for protection and asset allocation. They cannot be geared or be seen as speculative in nature (you can't short a share). So the funds qualifying would not be considered hedge funds. (MWEB newsletter)
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Lings
New Contributor
Tumi, can one open separate accounts for children in this account as well as for oneself and not incur any admin costs
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Barend1206
Contributor
Hi there. The TFSA must be opened for each person separately. Don't open 3 TFSA's with 3 different institutions under your name. You will be smacked with tax penalty on the amounts invested over R30k pa. Best way to do it is to open a bank account for each child - in their name, then open an OST account for them (assuming you use Std Bank and they are older than 7) Then you register a TFSA for each of them. Your fees per OST account is R70 pm if you do less than 3 trades a month. I have not seen any additional fees on the TFSA since I opened the accounts
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