Chances are you have heard about FNB tax-free investment work in South Africa, but you are yet to understand what it all is about. Worry not; you have come to the right place.
First National Bank offers several types of accounts, products, and investments.
The FNB tax-free Investment is one of the investment plans offered by the bank.
In this article, I’ll share everything you need to understand about this account.
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What Is First National Bank South Africa Tax-free Investments
Tax-free investments (TFIs), also recognized as tax-free savings accounts (TFSAs), are a type of investment where there is no taxation on the income, dividends, and interest gained after investment.
First National Bank stands among the licensed banks in South Africa to offer tax-free investment to residents and children.
The bank offers the investment opportunity under three different tax-free Cash Deposits, Tax-free Unit Trusts, and Tax-free Shares.
FNB South Africa Tax-free Cash Deposit
One of the ways to invest under FNB tax-free Investment is through tax-free cash deposits.
The bank guarantees repayment of the money invested and interest quoted during investment after the agreed time.
The investment lapses for 32 days, and you can access the money or choose to reinvest it.
FNB South Africa Tax-free Unit Trusts
The Tax-free unit trusts are yet another way to invest. Under this category, it is about investing in collective investment schemes.
The schemes are divided into equal units.
It is all about investing in different asset portfolios.
In other words, the unit trust is the money you invest, and it is polled to a specific fund of several investors.
The investors have entrusted their money to a fund management company and expect interest.
First National Bank Tax-free shares
The word tax-free shares for exchange-traded funds is the common term referring to exchange-traded funds (ETFs).
ETFs are typically listed investment products to monitor stock index results, trading as shares or stocks in an equity exchange.
FNB shares and FNB tax-free shares are not the same.
On the Johannesburg Stock Exchange, investors will buy and sell FNB shares (JSE).
One FNB share is equal to one unit of FNB ownership.
FNB tax-free securities, on the other hand, are a diversified portfolio of shares known as an ETF that invests on the JSE.
How FNB South Africa tax-free investment works
No matter the choice of investment you choose from the above option, you are required to contribute a minimum of R36 000 per tax year and up to R500 000 for a total tax-free lifespan.
These limits are regulated and can differ by legislation.
If you go above these thresholds, the South African Revenue Service penalizes you for contributions above the limits of 40% (SARS).
You need to track and ensure that you do not contribute more than the limitations specified.
The qualification to start the investment is to have an active FNB transaction account.
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