Your emergency fund SHOULD NOT sit in your TFSA account. 

Why?

When an emergency comes, you will need to withdraw from your TFSA account and that is where the problem is–withdrawing from your TFSA means reducing your overall lifetime limit of R500k. 1/

Example. If you deposited R20k emergency money into your TFSA account and an emergency occurs leading you to withdraw that R20k, you will be left with 16k (36-20) to still contribute to your TFSA for that financial year. Contributing more than R16k may be possible BUT... 2/

will get you severly penalised by @sarstax as you would've reached your tax-free limit for the year.

Now, how does it affect your R500k lifetime? Becos you are unable to replace the R20k withdrawn, your overall contributions become R20k less. Making your lifetime limit R480k. 3/

These are measures put in place to discourage people from withdrawing from the TFSA account. Put differently and more optimistically, these are measures put in place to ENCOURAGE people to save and invest for the long-term. 4/

Feel free to share with the community where YOUR emergency funds are sitting:)

#emergencyfund #tfsa #financiallegacy2020