For many South Africans, the words “tax-free” and “investment returns” rarely appear in the same sentence. Yet one simple timing decision could make a surprisingly big difference to your long-term savings.
New insights from South Africa’s largest private asset manager, Ninety One, show that investors who contribute to their Tax-Free Savings Account at the start of the tax year can potentially earn more than R100,000 extra in tax-free returns compared with those who invest later.
The difference comes down to one powerful concept: time.
Why timing matters more than most people think
A Tax-Free Savings Account, often called a TFSA, allows South Africans to invest money without paying tax on the growth, dividends, or interest earned. No capital gains tax, no income tax on the returns.
Since the accounts were introduced in 2015, they have been promoted as one of the simplest ways to build long-term wealth. The government recently increased the annual contribution limit from R36,000 to R46,000, while the lifetime limit remains R500,000.
But research from Ninety One suggests that many people still overlook one crucial factor. When you invest, what matters almost as much as how much you invest.
By putting money into a TFSA earlier in the tax year, the investment has more time to grow and compound. Over many years, that extra time in the market can translate into significantly larger returns.
A simple example with a big result
Investment strategist Paul Hutchinson analysed three different investors to demonstrate how timing affects outcomes.
Each investor contributed the same total amount each year, using the previous annual limit of R36,000. All three invested in the Ninety One Opportunity Fund, which has delivered an average annual return of 12.9 percent.
The difference lay only in timing:
• Investor one contributed the full R36,000 at the beginning of the tax year.
• Investor two invested R3,000 every month.
• Investor three waited and invested the full amount at the end of the tax year.
Over time, the results started to diverge.
By investing earlier, the first investor’s returns compounded sooner. After 15 years, their payout was around 10 percent higher than the investor who waited until the end of each tax year.
Even the monthly investor ended up about 5 percent ahead of the person who delayed their contribution.
With today’s higher annual limit of R46,000, the principle remains exactly the same. The earlier the investment goes in, the longer it has to grow.
How some investors are already benefiting
While many South Africans are still underutilising TFSAs, a few early adopters have already seen the rewards.
Ninety One reports that one investor has grown their TFSA to more than R1.13 million in value without yet reaching the lifetime contribution limit of R500,000. That entire amount remains tax-free.
Despite examples like this, uptake across the country remains relatively small.
By the end of 2025, Ninety One had opened just 46,609 TFSA accounts, with an average account value of about R147,164. Altogether, these accounts held around R6.74 billion.
For context, the firm manages roughly R3.53 trillion in assets overall. In other words, TFSAs still represent a tiny portion of the total investment market.
Why many South Africans still miss the opportunity
Part of the challenge is affordability. Not everyone can invest a lump sum of R46,000 at the start of a tax year.
But financial planners say the key lesson is not about perfection. It is about starting as early as possible with whatever amount you can manage.
Even a monthly debit order can make a noticeable difference compared with waiting until the end of the year.
As more South Africans become familiar with TFSAs, especially when paired with retirement annuities, experts expect these accounts to play a bigger role in long-term savings strategies.
Image 1: Daily Investor
The bigger picture for South African savers
With rising living costs and ongoing financial pressure on households, building wealth can feel out of reach for many people.
Yet tools like the tax-free savings account were designed specifically to help ordinary savers get ahead over time.
The message from investment experts is simple. Start early, stay consistent, and let compounding do the heavy lifting.
Because in the world of investing, time is not just money. In the case of a TFSA, it could mean an extra R100,000 in your pocket, completely tax-free.
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Source: Daily Investor
