Don’t let April be another wasted tax-free savings month

South Africa designates April as Savings Month, which is either a useful nudge or a mild rebuke, depending on how you look at it. For investors in tax-free savings accounts (TFSAs), it lands somewhere in between.

The 2025/26 tax year just ended, and the pattern held. On the Ninety One Investment Platform, 22% of TFSA inflows arrived in February alone – the final month of the tax year. Another predictable last-minute rush, another year of investors leaving money on the table by not starting earlier.

It’s a behavioural thing, mostly. The deadline focuses the mind. But with TFSAs, late is genuinely worse than early, and the numbers make that uncomfortably clear.

Analysis by Ninety One, based on modelling using the Ninety One Opportunity Fund, shows that investing the annual maximum at the beginning of a tax year, rather than at the end, can yield as much as 16% more over 15 years. That’s not a rounding error. 

On a lifetime contribution of R500,000, that difference becomes significant. And for those who can’t commit to a lump sum at the start of the year, a monthly debit order of R3,833.33 – the new monthly equivalent of the R46,000 annual limit – still beats waiting until February. The sooner investment returns start compounding, tax-free, the longer they have to work.

The new limit is worth dwelling on. The February 2026 budget raised the annual TFSA contribution from R36,000 to R46,000 – the most meaningful increase since TFSAs were introduced in 2015. Many investors who set up monthly debit orders years ago have never adjusted them. Plenty are still running the original R2,500 or R2,750 per month. At R3,833.33, the new monthly maximum may mean less to spend elsewhere, but the tax-free compounding effect over time more than compensates.

Ten years in, the case study evidence is striking. Someone who has maximised contributions from the outset would have put in R375,000 by the end of February 2026. The largest individual TFSA account on the Ninety One Investment Platform stands at approximately R1.13m – meaning the investment has generated R791,000 in tax-free growth on top of the capital invested. More than 2.3 times the original contribution, untouched by capital gains tax or income tax. That’s what the structure is designed to do, and it works when investors let it.

There were six TFSA millionaires on the Ninety One platform at the end of 2025. In another decade, the list will be longer – and those accounts could become a meaningful source of tax-free income in retirement.

The fund choice matters as much as the timing

One mistake that gets less attention than the timing issue is fund selection. A TFSA is a long-term vehicle – at the new annual limit, it would take someone starting today almost 11 years just to reach the R500,000 lifetime contribution cap. Using it to hold cash or a money market fund is a structural mismatch. The tax benefit is most powerful when applied to assets that generate real growth over time: capital gains, dividends, compounding returns. Shielding a cash return from income tax is a much smaller prize than shielding equity returns from CGT.

Most investors appear to understand this – approximately 93% of those on the Ninety One platform are in offshore, equity, or multi-asset (balanced or flexible) funds. Among last year’s top 10 TFSA inflow funds, six were global equity funds, three were high-equity multi-asset funds, and one was a South African equity fund. 

But roughly 10% of investors are still not in growth assets. For a product with a 11-year contribution horizon, that’s a meaningful drag.

Don’t raid it

The other persistent mistake is treating a TFSA as an emergency fund. The contribution allowance is use-it-or-lose-it – if money is withdrawn, that allowance cannot be reclaimed. The annual limit applies to contributions, not to net position.

The good news is that withdrawal behaviour has improved significantly. Over the two years prior, almost 12% of Ninety One Investment Platform TFSA investors made at least one withdrawal. That figure has now fallen to below 3%, with less than half a percent making a full withdrawal. The message appears to be getting through.

The arithmetic of starting now

The new tax year started on March 1. April is four weeks in. Investors who haven’t yet contributed for 2026/27 have already let a month go by. That’s not catastrophic – but each month of delay is a month of tax-free compounding that doesn’t happen.

Savings month is a convenient moment to act. The limit is higher, the tax-free runway is long, and the evidence from the investors who started early and stayed invested is hard to argue with. The best time to top up a TFSA is at the start of the tax year. The second best is now.

Daryll Welsh is head of product at Ninety One Investment Platform.  

ALSO READ:

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• Want tax-free savings for your kid? Here’s what to do – and not
• R1,000 for every South African baby? Sarupen thinks it could work

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