Tax-free and Micro-Investing​


You may believe that you do not have enough money to invest yet and so you cannot become an investor.​

This module will help to undo this myth, and highlight the simple but effective ways that you can start to allow your money to work for you.​

You can achieve your investment goals by starting small through tax-free and/or micro-investing.

What is Tax-Free Investing?

With tax-free investment, you don’t pay tax on your investment returns – both while you’re invested and when your investment pays out. The taxes you save remain invested to grow, which can make a big difference in the long-run.​

Tax free means:​

  • No tax on interest or other income​
  • No dividend tax​
  • No capital gains tax​

This type of investing works especially well if you earn taxable income. You can get tax-free savings products including cash deposits and ETFs through nearly all banks, investment companies and stockbrokers.

Pros and Cons of Tax-Free Investing


  • It grows your savings without any taxation.​
  • You have unrestricted access to your money. (However, it is recommended to keep your money saved in the account over a long-term horizon so as to fully realize the benefit of compounding your tax-free return.)​
  • You do not pay any initial fees or exit penalties ​
  • Choose from a range of funds to suit your investment needs. ​
  • You have the option of opening a tax-free investment for minor children.


  • Only South African resident individual investors (not trusts, companies, stokvels etc.) are eligible.​
  • You are only able to contribute a maximum of R33 000 per annum or R500 000 over your lifetime.

What is Micro-Investing?

Micro-investing offers average people a way to profit from the higher returns offered by financial markets in a convenient and low-stress way. You can open accounts with low- or no- minimum-deposit requirements and fractional investing where you can buy, for example R100 of Naspers shares.​

The aim of micro-investing platforms is to get rid of traditional hurdles to investing, such as brokerage account fees, so that people are encouraged to invest even if they have limited incomes and assets. By making investing simple and painless, micro-investing platforms can help people who otherwise wouldn’t store up savings for future investment.​

Micro-investing is still very young in South Africa and the best way to invest painlessly is tax-free investing. However, there are apps such as Stash or Easy Equities where you can micro-invest.

How Does Micro-Investing Work?

You can micro-invest through easy-to-download apps, depending on what is available for the South African market. These apps normally leverage exchange-traded funds (ETFs).​

Most of the platforms offer personalized portfolios based on your risk tolerance, which can be calculated by a series of questions regarding age, life plans and aversion to taking a loss on your investment.​

Some apps hook up to your bank accounts and allow them to transfer money on a one-time basis or as a recurring deposit. Other apps automatically invest extra money in the form of spare change, syncing up with your debit or credit cards and taking the difference between the purchase price and the next full rand amount to invest.​

All that taken into consideration, micro-investing serves as a gateway to the share market for individuals with little in savings or not much income. For those that remain skeptical of investing, who lack experience or are just starting out, micro-investing serves as a simple way to start setting aside a small amount of money on a regular basis with minimal commitment.