I'm a 25 (F) year old Candidate Attorney receiving a stipend of 7k per month

[zandry42]

@artsycat Hi wassup - the biggest benefit of an RA is the fact that you get to invest your pre-tax income and thus lessen your income tax burden. I have no idea what an admitted attorney earns, but I assume it's pretty well, so would definitely recommend investing in an RA to reduce the already substantial amount of tax you'd have to pay. The idea is that you save this money, and don't pay tax on it now, so that you can earn compounding returns and when you withdraw it when you retire and pay the tax on it, you pay less tax (because you have comparively lower living costs eg no rent bc you own your house and get a higher age related tax rebate). Ie don't pay the tax now, earn interest on it and pay it later with a bigger discount. B-)

 

[zandry42]

Until you start paying income tax, a TFSA can be seen as a slightly better Alternative because of the lack of investment restrictions. But once you start paying substantial tax (eg 40%) then it becomes less clear. At this tax rate investing R2000 (after tax) in a TFSA Is equivalent to investing R3333 (before tax) in an RA in terms of the impact on the amount of money you're left with at the end of the day.

Generally its a good idea to use both of these options.

 

[katiemygirl]

@artsycat Your employer is paying you for rendering services. While it may be called a "stipend", it is still remuneration. As such, your employer should be complying with the UIF Act by making contributions to the Fund (1% from you and 1% from them). The irony of the law firm trying to avoid this obligation is not lost on me.