FAQs
Do I need a financial advisor?
Probably not. If you are simply saving into a Tax-Free Savings Account (TFSA), a Retirement Annuity (RA), or buying low-cost index funds, you can easily manage this yourself.
Advisors charge ongoing percentage fees that eat into your returns over time. While an advisor can be useful if you have complicated taxes, trusts, or large estates, most people do not need one for standard long-term investing.
Where do DIY investors start?
Here is a common setup:
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1. The Tax-Free Savings Account (TFSA)
Contribute up to your annual limit (currently R46 000 a year, from 1 March 2026, up to R500 000 over your lifetime). All growth and withdrawals are completely tax-free. TFSAs work best when left untouched for decades. Withdrawing early permanently uses up your once-off lifetime limit. The entire time your money stays invested, you pay zero South African tax on dividends and interest. When you eventually sell your ETF or unit trust units, you pay zero capital gains tax. A US share fund can still have US dividend tax taken off before the dividend is paid. If you start early and let it grow untouched, a TFSA becomes a massive wealth-building engine.
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2. Low-cost global index funds (ETFs)
Many investors use their TFSA to buy broad index funds that track hundreds of top global companies at tiny fees, spreading out risk.
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3. Put it on autopilot
Setting up an automatic monthly debit order on a low-cost investment app builds the habit without worrying about daily market ups and downs.
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4. Where a Retirement Annuity (RA) fits in
If you want tax breaks on your salary, an RA cuts your tax bill today. The trade-off is your money is locked until age 55. Signing up directly avoids advisor fees.
Why can’t I just put all my retirement annuity (RA) money into a single low-cost global ETF?
In South Africa, a retirement annuity has to follow legal rules called Regulation 28.
These rules exist to protect your savings from taking on too much risk, but they also limit what you can buy:
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Offshore limit
You cannot invest more than 45% of the money outside South Africa. A standard global ETF usually holds nearly 100% offshore assets.
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Equity limit
You cannot hold more than 75% in total company shares.
Because of this, you cannot put 100% of your RA into a single global or pure-stock ETF.
Instead, you must choose a Regulation 28 fund that blends local shares, foreign assets, bonds, and cash. Examples include:
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Actively managed balanced funds
Such as the Allan Gray Balanced Fund, where the managers pick and adjust the mix inside the legal limits.
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Low-cost index-tracking balanced funds
Such as the Sygnia Skeleton Balanced 70, or the Sygnia Skeleton Balanced 60 and 40. These follow the rules with low-cost index funds.
How does a retirement annuity work, and how do I get my money out?
A retirement annuity (RA) is a personal savings plan for old age. It gives you a tax break while you work, and most of the money stays locked away until you retire.
Here is how it works from start to finish:
Putting money in
You contribute monthly or in lump sums. You can deduct contributions from your taxable income up to a maximum limit:
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Percentage
Up to 27.5% of your taxable income or your pay, whichever is higher.
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Rand cap
Capped at R430 000 a tax year, from 1 March 2026. Pension and provident fund contributions count toward the same cap.
Growing tax-free
While your money sits in the fund, you pay no South African tax on dividends, interest, or capital gains.
Getting money out
You can retire from the fund from age 55. You can also take it earlier if you are seriously ill, or if you have not been a South African tax resident for three years. Since 1 September 2024, one-third of new contributions goes into a savings pot. You may withdraw from that pot once a tax year, if it holds at least R2 000. That withdrawal is taxed as normal income. The other two-thirds goes into a retirement pot. That retirement pot stays locked until you retire.
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Cash lump sum
At retirement, cash can be taken only from what is left in the savings pot, plus any pre-September 2024 vested balance. You cannot take a cash lump sum from the retirement pot. If you withdraw the savings pot while you are working, no cash lump sum is left at retirement. The first R550 000 of retirement lump sums in your lifetime is tax-free. The rest of that cash is taxed on the SARS retirement lump-sum tables.
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Monthly income
The retirement pot must be used to buy a living annuity or a guaranteed life annuity. You cannot take that portion as cash. That pension is taxed as normal income.
If your whole RA is R360 000 or less, from 1 March 2026 you can take the full amount as cash.
I am 50 years old. Does it even make a difference to start or keep saving now?
Yes. 15 years until age 65 provides a meaningful investment horizon, and at 50 you may already have capital you can put to work.
Key considerations for this stage of planning:
The limitation of cash
While South African money market funds often keep pace with inflation before tax, cash alone offers little to no real wealth creation. At an average inflation rate of 5% per year, R1 000 000 today buys what roughly R481 000 will buy in 15 years. Beating inflation after tax requires exposure to growth assets.
Managing market cycles
The primary risk at 50 is timing. Equities move in multi-year cycles, and you want to avoid a major market crash right when you transition into retirement.
A balanced fund foundation
To manage this risk, many retirement savers use a multi-asset balanced fund. Under Regulation 28 of the Pension Funds Act, these funds are capped at 75% equity and 45% offshore. Spreading capital across cash, bonds, and equities limits downside volatility compared to a pure equity portfolio.
Discretionary offshore growth
Investors seeking higher offshore equity exposure than Regulation 28 allows often invest through a separate, non-retirement account (or a Tax-Free Savings Account) using global index-tracking ETFs.
The buffer strategy
A balanced fund acts as a shock absorber. Because its drawdowns during market corrections are typically milder than pure equities, it provides stability and helps prevent you from being forced to sell depressed offshore shares to meet living expenses.