PSG tax-free investment plan review 2024

PSG’s Tax-Free Investment Plan offers individuals an opportunity to save money and earn interest on their investment without being subject […]

PSG tax-free investment plan

PSG’s Tax-Free Investment Plan offers individuals an opportunity to save money and earn interest on their investment without being subject to taxation.

Investments made within the account are exempt from taxation, allowing total earnings from the PSG tax-free investment plan to be distributed tax-free.

Before delving into the PSG tax-free investment plan, it’s important to note that there are no capital guarantees associated with this investment strategy. This means that the investment amount fluctuates based on the market value of the chosen underlying instruments.

The PSG tax-free investment plan primarily invests in unit trusts, which serve as underlying products within the account. Investors can select unit trusts based on their risk tolerance, ranging from low to high-risk options that invest locally, internationally, or both.

Opting for the PSG tax-free savings account comes with several benefits, especially for those looking for long-term savings. While there are no profit guarantees, historical data shows that underlying instruments tend to perform well over time, often surpassing the South African inflation rate.

Overall, the PSG tax-free investment plan offers a favourable environment for both tax considerations and investment rewards. In the following sections, we will delve deeper into the account’s features, operations, and benefits to gain a comprehensive understanding of its workings.

PSG Tax-Free Investment Plan Summary 

PSG tax free investment is a tax free savings account that requires a minimum lump sum deposit of R6,000.00 or a monthly debit order of R500.00.

Alternatively, account holders can make contributions quarterly by investing R1,500.00 per quart. Biannual contributions of at least R3,000.00 can also be made. 

The PSG tax-free investment plan must adhere to SARS contribution rules, thus the account can only accept R36,000.00 per year in contributions.

The maximum contribution one can make in a lifetime is R500,000.00. Failure to follow these guidelines will result in a 40% tax penalty on any sum that exceeds SARS’s restrictions.

There are no withdrawal penalties with the PSG tax-free investment plan. The money invested in the account can be accessed at any moment.

The account has no fixed term. However, withdrawals from the account can be requested on a monthly, quarterly, biannually, or yearly basis.

The SARS yearly contribution limit or lifetime contribution limit may not increase due to any withdrawal(s) made from the account. Whether or not there was a withdrawal, the SARS contribution limits apply.

Since withdrawals from the account are not taxable, any money withdrawn is not subject to capital gains tax or any other type of tax.

How the PSG Tax-Free Investment Plan work

The PSG tax-free investment plan can be applied for online or requested by requesting a callback through the PSG website. Only South Africans will be able to use the product, and an ID number will be required. An application for a new account must be submitted through a certain channel.

When submitting an application, the applicant will be given the option of investing in one of seven investment vehicles. These investment vehicles will need to be thoroughly examined to verify that they are appropriate for one’s risk tolerance. Among the investment options are:

  • PSG Balanced fund, 
  • PSG equity fund, 
  • Allan Gray’s stable fund
  • PSG multi-management growth fund, 
  • PSG stable fund, and more.

An investment can now be made into the account after successfully opening a tax-free investment plan. The SARS annual contribution barrier of R36,000.00 and the lifetime contribution threshold of R500,000.00 must be met at all times. Contributions begin at R500 per month. However, they can be interrupted or cancelled at any moment without incurring any penalty.

The underlying assets in which the capital has been invested will decide how much interest will be earned on the investment. It’s still possible to lose money from time to time. Furthermore, withdrawals can be made at a set rate. Withdrawals can be done monthly, quarterly, or yearly, for example.

Advantages of the PSG tax-free investment plan 

  • The minimum monthly contribution of R500.00 is low when compared to other TFSAs in South Africa, which start at R1,000.00. 
  • There are no penalties when contributions are skipped. 
  • Withdrawals from the account can be made at any time. 
  • There are no taxes charged on the earnings made from an investment. 
  • The account holder can switch between underlying instruments at no cost. 
  • There are many investment options to choose from. 

Disadvantages of the PSG tax-free investment plan 

  • The product is only available to South Africans that are natural persons. 
  • There are no guarantees that the savings made into the account will increase in value. 

Requirements of the PSG tax-free savings account

  • Have a valid South African ID number. 
  • Have a working bank account (must have the bank account number and other related bank account details). 
  • Proof of residence (which has to be provided through word of mouth or by typing) 
  • Have an underlying investment product where capital will be invested. 


The PSG Tax-Free Investment Plan is one option to invest in for a variety of reasons, with the possibility to earn favourable tax-free returns. Opening an account is simply because there is no minimum income needed and it may be stopped or paused at any moment. As a result, full-time or part-time employees can afford this sort of savings.