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Benefits of Tax Free Investments

As the name suggests, all returns on tax free investments are completely free of tax.

This includes

  • income – such as interest received
  • capital gains – such as the increase in value in an ETF (we will deal with this in more detail in the next topic)
  • dividends

The tax benefits of tax free investments are compounded over longer periods of time. Therefore, if used cleverly, tax free savings can result in huge tax savings for long-term investments.

In the next topic we will explore the ways in which a tax free investment is best utilised and consider some examples which demonstrate the possible benefits.