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Why wouldn't you want a tax free investment?

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The most common reason would be that you already have money in another one.

You’re allowed to have more than one tax free investment, but you can’t put more than R33,000 a year (and R500,000 over your lifetime) into all your tax free investments in total. 

If you do, you will pay a penalty tax of 40% on any amount you invest over these limits. (So, if you invest R25,000 tax free with one company and R10,000 tax free with another company, you’ll have put in R2,000 more than the limit. SARS will levy a 40% tax on the R2,000 excess.) 

No companies can accept more than these annual and lifetime limits, but they won’t know if you have other tax free investments with other companies. 

Another reason might be that you’re saving for something in the short or medium term.

For example, a holiday or deposit on a house in 2 or 3 years. The longer you leave your money in a tax free investment, the more it grows. While you can withdraw from a tax free investment any time, you can’t replace what you take out and still get the “tax free-ness”.

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