It's possible to receive 22% - 67% increase in growth of investment!

By: Retirement Annuity Direct  09-01-2012
Keywords: Retirement, Pension, retirement annuity

1)       Are you a taxpayer?

2)       Do you have deductable RA contributions available?

If your answers are ‘YES’ to the above mentioned 2 questions, continue reading to find out how it is possible to have an increased investment value of 22% - 67% on recurring retirement annuity payments, before you have earned any returns on your investment itself!

We will demonstrate above mentioned statement with an example. Your can do your own personalized calculation on the ( www redirect co za ) website to determine how much you will save.

According to current tax legislation your payments to a retirement annuity fund qualify for tax relief.

For the demonstration we assume a taxable income of R 30 000 pm and an available tax deduction of R 1000 pm:

Gross yearly RA payment                      R 12 000

Possible tax saving                               R   4 200

Net yearly Payment                              R   7 800

This saving is an equivalent to receiving 54% return on your investment pa! A marginal tax rate of 35 % is assumed. (Taxable income R 346 001 - R 484 000 pa.)

 

Explanation of this tax saving on a retirement annuity work?

If you pay R 1000 pm towards a retirement annuity it would be the equivalent of spending or saving R 650 pm in another product where you use money that has already been taxed at your marginal tax rate of 35 %.

Summary: You are actually saving R 650 + the tax of R 350 you would have otherwise paid. This means your investment of R 650 is immediately worth R 1000, and that is the equivalent of 54% interest paid on your investment before you receive any returns from the funds you are investing in.

Keywords: Pension, Retirement, Retirement Annuities, retirement annuity

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