How to pick the best Tax Free Saving Account (TFSA)


Picking a tax free saving account should not be that complicated , particularly when it is designed to be used for your convenience. There are certain features that you want your tax free saving account to have and some you really want to avoid in order to optimise on the benefits of this tax exemption.

The features that you want in your Tax Free Saving Account


Flexibility is the most important thing when it comes to a tax free saving account. A tax free saving account can be opened with a bank or with a broker. A broker is often a better option as the banks often impose their own requirements and limitations on how you can manage and run the account . For example some of them have minimum deposits that you have to contribute towards the tax free saving account , and in addition to this there is a prescribed manner on how it must be done. These requirements can be problematic and create a barrier of entry for many investors . Furthermore, and even more troubling is that some of these institutions do not give you a flexible range of choices of assets to allocate into your tax free saving account. They often limit the options of financial products that can be allocated to this account. This is often done so that investors are more inclined to invest in that financial institutions own financial products and not those of their competitors.Therefore, for this reason you would prefer investing through a financial institution that will give you a very diverse and unlimited range of financial products to choose from.

2. No high fees and charges.

The objective of a tax free saving account is to help the investors capture the most profits that they can from their investment portfolio. This objective can be easily compromised and even defeated if high costs are incurred from utilising a tax free saving account. Some banks and even brokers charge unreasonable administration fees and costs to keep a tax free saving account open. If you find yourself paying more than 1% to keep your tax free saving account open, you may need to start reconsidering transferring your account to a better financial services institution.

3. Information and market researched provided .

This perhaps is a bonus feature, but it is always ideal to have a tax free saving account with an institution or service provider that will provide you with the latest market research or information that will help you improve your investment portfolio. More so in the case of a tax free saving account you want to be well informed by the account provider of any amendments to legislation that will impact your investment portfolio.

It is always best to do your research on which tax free saving account is the best for you, but this can be a very taxing job (no pun intended) and for this reason we have done reviews on some of the major tax free saving accounts in South Africa and you can access them for free using this link . From our research we can say that some of the best tax free saving accounts in South Africa are:

  1. Satrix
  2. CoreShares
  3. Allan Gary
  4. EasyEqities

Do take note of the fact that you can open more than one tax free saving account, but they will all be collectively subject to the monetary limitations on your annual contributions as stated by legislation. If you wish to learn more about this you can use the following link :

How to contribute to your TFSA.

Often when you open an account directly with a brokerage they tend to give you a tax free saving account automatically. In the case of banks you often have to make a separate request that they open for you a tax free saving account. Depending on the institutions this may be done with additional charges and an administration fee.

Depending on the investing platform that you invest with it may be as easy as selecting your tax free saving account and allocating certain assets to that account. Alternatively you may be required by your account provider to fill out a form and manually state what assets you wish to allocate to your tax free saving account.

There is another way to invest in tax free saving account, some investing companies like ETFSA have tax free saving account products which they call ETFIA (ETF Tax Free Investing Account) products , that already offer you a selection of assets to invest in that will automatically go towards your tax free saving account . Reviews of these products can be found using this link :

When choosing a tax free saving account its is important that you choose what best suits your financial interests, and to help you establish what this I have outlined some questions that can help you make this right decision: 

  1. Are their charges with this tax free saving account?
  2. If there are, what are the additional features that come with this account and are they worth it?
  3. Do you have flexibility with this account?
    1. Can you invest any amount subject to the monetary limitations when you want to ?
    2. Are the minimum requirements placed on the account?
    3. Does this account allow you access to a broad range of financial products?
  4. Is the account accessible to you as an investor or is there a lot of steps and processes to manage the account?

It may be that you have already opened a tax free saving account , and you are not happy with your account provider. There is no need to worry because you can now transfer your tax free saving account from one provider to another without impacting your limits on how much can contribute annually and through your life towards the account. Usually it should be an easy process that requires you to fill and submit an application form requesting a transfer. Depending on the account provider they may charge some administration fees for this to take place. That is why where it can be avoided, it is the best option to choose the right tax free saving account from the start.


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