How TFSAs and RAs can help you build wealth in uncertain times

While uncertainty is part of every economic cycle, events like the 2008 financial crisis or the COVID-19 market crash can easily shake investor confidence. History shows us, however, that those who stay invested are often best positioned to recover and compound their wealth over time.

That’s not because any product is immune to volatility, but because disciplined savings help investors stay the course. Vehicles such as Tax-Free Savings Accounts (TFSAs) and Retirement Annuities (RAs) are particularly useful given that they offer tax-efficient savings strategies.

Consistency over reaction

One of the greatest threats to long-term savings is emotion-driven decision-making. In an RA, the larger portion of your investment is inaccessible until age 55, which helps remove the temptation to draw out during downturns. With TFSAs, the annual contribution limit of R36 000 per year supports gradual, committed investing rather than lump-sum reactions

By staying invested through volatility, investors benefit from market rebounds, compound growth, and rand-cost averaging, which can significantly improve performance over time

Making patience profitable through tax efficiency

In times of uncertainty, when returns may fluctuate, tax efficiency is one of the key differentiators. This is particularly pertinent if growth is lagging because of market pressure or inflation, as not losing part of that return to tax can meaningfully improve long-term outcomes. 

With no tax on growth, interest or dividends, TFSAs and RAs keep more of your capital compounding, ensuring that your returns stay invested, helping your portfolio compound faster when markets recover. With RAs, the additional tax deduction on contributions can provide immediate relief to higher earners, effectively boosting the amount committed to long-term savings even during leaner times.

Balancing flexibility with long-term protection

The idea of locking away your money can be daunting when the future feels uncertain. Each of the two tax-efficient saving vehicles offers a different balance between flexibility and security, depending on your goals and circumstances.

A TFSA allows withdrawals at any time without tax penalties. However, withdrawals count toward lifetime contribution limits, which can limit long-term compounding potential. An RA, conversely, provides structured long-term protection. Funds are locked in until retirement (except for the savings component in case of emergencies), reinforcing commitment and aligning with goals like income security in later life.

Learning from the past 

While the future remains uncertain, we know that investors who remain committed to their savings strategies generally recover the strongest from previous periods of market volatility. 

The key lesson is that time in the market is extremely important when trying to achieve your investment goals. Products like RAs and TFSAs, that support discipline and tax efficiency, give investors better odds of securing their financial future. 

Author: Thomas Berry, Head of Sales at PSG Wealth