Tax-free savings accounts (TFSAs) were introduced in 2015 to encourage South Africans to save more. Ten years later, we now have a sufficiently long track record to analyse whether investors and advisors are maximising the material benefits that they offer; the growth and income received on a TFSA are tax-free, which means that you are not liable for any capital gains tax (CGT) or income tax on the dividends and interest received on your investment.
Maximise your annual TFSA contribution, early in the tax year
Consider that someone who has maximised their annual contribution limit from the outset would have invested R375 000 by the end of February 2026. Interestingly, the largest TFSA account value on the Ninety One Investment Platform (Ninety One IP) was approximately R1.13 million by the end of December 2025, i.e. tax-free growth of R791 000 – more than 2.3 times the total amount invested! And in aggregate, TFSA investors at Ninety One IP now have a total of approximately R6.75 billion invested; being a combination of the smallish annual contributions and tax-free market growth.
Maximising any tax benefit is an important consideration, as is appreciating that the earlier you start earning investment returns, the earlier those investment returns start compounding. Analysis1 undertaken by Ninety One shows that simply investing in the Ninety One Opportunity Fund via a TFSA at the beginning of each tax year, as opposed to the end of the tax year would result in as much as an additional 16% payout after 15 years. And, for those who cannot commit to an investment of R46 000 at the beginning of each tax year, it is still more financially rewarding to initiate a monthly debit order of R3 833.33, compared to investing R46 000 at the end of each tax year.
Unfortunately, an analysis of Ninety One IP TFSA cash flow shows that not only are many investors waiting until the end of the tax year to top up their TFSA but that many debit order investors have not increased their monthly debit order amount from the previous maximum contribution limits of initially R2 500 per month and then R2 750 per month to the prior limit of R3 000 per month. Be sure not to miss out now that the monthly limit has increased to R3 833.33.
Disappointingly, less than half of active TFSA investors on the Ninety One IP platform made an investment into their TFSA in the last tax year. Fewer still invested close to the maximum allowance.
These are all opportunities missed.
Invest for growth, over the long term
A key insight when setting up a TFSA is that the underlying investment portfolio should be consistent with the long-term nature of the investment; based on the current annual limit it will take almost 14 years to reach the lifetime contribution limit of R500 000. This is a key consideration as the tax benefits of TFSAs compound exponentially over time. Therefore, it makes no sense for an investor to use a TFSA for an investment horizon of less than five years.
While most Ninety One IP TFSA investors appear to agree - more than 90% are invested in offshore, equity or multi-asset (balanced or flexible) funds - unfortunately up to 10% of investors are not maximising the return potential of growth assets/investments.
Don’t treat your TFSA as an emergency fund
TFSA benefits only accrue to those investors who remain invested for the full investment period. Remember that a TFSA allowance is a ‘use it or lose it’ allowance – if you withdraw some or all of your TFSA investment, you cannot reinvest the amount withdrawn.
A significant development over the past year has been the decline in the number of investors who accessed their TFSA. Over the previous two years, almost 12% of Ninety One IP TFSA investors made some level of withdrawal. This has now fallen to below 3%, with less than half a percent making a full withdrawal.
The message that TFSAs should not be accessed unless absolutely necessary appears to be resonating.
Conclusion
In ten short years, early adopters are already reaping the material benefits offered by TFSAs. However, it is critical that investors stay the course and whenever possible, invest the maximum allowable amount at the beginning of each tax year into a growth-oriented fund. If this is not possible, it is preferable to initiate a monthly debit order rather than wait until the end of the tax year to contribute. The earlier you start earning investment returns, the earlier those investment returns start compounding, tax-free!
Ninety One TFSA fast facts
The benefits of a TFSA are increasingly being recognised, as illustrated by the following summary data of Ninety One IP’s TFSA accounts as at 31 December 2025. (31 December 2024 details in brackets):
Total number of
Ninety One TFSA accounts
46 609
(R38 708)
Total value of
Ninety One TFSA accounts
up 33% year on year
R6.74bn
(R5.08bn)
30%
of Ninety One IP's TFSA assets
are invested in Ninety One unit
trust funds
The value of investments in the
Ninety One Global Franchise
Feeder Fund exceeds
>R1 billion
making it the most supported
fund by some margin
Average value
per account
R147 164
(R131 035)
Largest individual TFSA account
R1.13 million
Close to
92%
of Ninety One IP's TFSA clients
are advised by financial advisors
Approximately
93%
of Ninety One IP's TFSA assets
are invested in offshore, equity or
multi-asset (balanced or flexible)
funds, suggesting that these
investors are prudently investing for long-term growth
Tax-free savings
Maximise the long-term growth of your savings by benefiting from a tax-free savings account (TFSA).
