TFSA vs Retirement Annuity: which is actually better for South Africans?

Most South Africans treat the TFSA vs RA debate as either/or. The smarter answer is "both, in the right order".

The 60-second summary

• TFSA: R36k/yr cap, R500k lifetime. No tax on growth, withdrawals or interest. Fully liquid.
• RA: Up to 27.5% of income tax-deductible (cap R350k/yr). Locked until 55. Two-thirds must annuitise.

Which one first?

If your marginal tax rate is 26%+ and you have an emergency fund, RA wins on after-tax return. Below that, max your TFSA first — see our TFSA fund picks.

Common mistakes

Double-dipping on regulation 28, ignoring RA fees, treating TFSA like a transactional account.

Related

• Best banks for TFSA accounts
• SARS auto-assessment guide