How would you structure your savings in my position?
Hi everyone. I’m looking for some advice on how to structure my savings/investments more efficiently, particularly from a tax perspective.
I feel like I’ve done reasonably well at saving, but most of my money is sitting in interest-bearing accounts and I’m starting to realise this probably isn’t the most tax-efficient way of doing things.
Current situation:
33 years old.
Paid off vehicle, currently renting with no prospects of buying a house within the next 5 years.
I earn quite a bit of variable overtime.
Average gross income: R58,300/month
Average net income: R40,300/month
Current savings/investments:
Current/day-to-day account: R80,000
Fixed deposit @ 6.75%: R183,000
Savings account @ +-5%: R737,000
TFSA: R302,000 (annual contribution already maxed for this year)
So excluding my pension, I have roughly R1.3m between cash/savings and my TFSA.
For retirement, my employer contributes R2,850/month to a pension fund and I match this with another R2,850/month (R5,700 total). I currently do not have a retirement annuity.
My main concern is that I have almost R1m sitting in cash/fixed deposits, and the interest is resulting in an increasingly large taxable amount above the annual interest exemption. The R737k earning only 5% also doesn't seem like a particularly good long-term use of the money.
I'm considering:
Keeping around R200k–R300k accessible as an emergency/cash reserve.
Continuing to max my TFSA every year.
Starting an RA of around R5,000/month to make better use of the retirement contribution tax deduction.
4.Moving perhaps R400k–R600k of the current savings into longer-term discretionary investments, rather than continuing to earn taxable interest on it.
- Using overtime income for additional investments/RA contributions rather than increasing monthly expenses.
I currently manage my own TFSA using Easy Equities, can I use the same platform to manage my discretionary investments?
I'd appreciate opinions from people who understand SA tax/investments better than I do. How would you structure this if you were in my position?