Best savings options in south africa

Stealthy Wealth: The Best RA In South Africa

 

best savings options in south africa

Mar 06,  · The best investment to make with your money in South Africa: Property vs stocks vs fixed interest A look inside the revamped Shongololo Express luxury rail line Next article New BEE regulations are putting South Africans' lives at risk: report Previous article. Since March , South Africans have been able to invest R30 a year, or R2 a month, in a tax-free investment to a lifetime maximum of R If they do this religiously, investors will, after some 17 years, have R plus capital growth, interests and dividends, as a tax-free investment. Oct 30,  · Popular investment options: 1. Retirement fund. The key to retirement is to start investing as soon as you can. Your retirement savings are dependent as much on your ability to be patient and to leave your nest egg alone as it is on the contributions you make every month. Make sure you have a good financial planner to help you invest your money. Pros: 1.


South African Savings Institute


The RA landscape is quite literally a minefield of hidden charges, commissions, poor performance and what-the-hell-is-going-on-under-the-hood? Who wouldn't want some help? As a result many people end up in high fee products which don't perform and are left with a large pile of regret and a smaller pile of retirement money.

But with so many moving parts, how does someone go about choosing the best RA? Well, in my opinion, there is actually only one factor that determines which RA to go with. In this post I will use that factor to draw up a list of what I consider to be the best three RA's in South Africa at the moment, and then pick a winner.

Could be interesting Huge disclaimer right up front - I am most certainly not a financial adviser, and the below is most certainly not financial advice blah blah blah…. Okay, with the formalities out the way, let's get to it I could well be enticed by the tax benefits of an RA. Naturally I would want to sign up for the best RA. So maybe first off I should try and define "best". To me the best RA would be the one which gave me the most money at the end. Not so? Maximising your investment is the whole point of trying to make sure you pick the right RA.

So the next question is - What are the factors that will influence the final investment amount? In my mind there are two ignoring time and contribution here because that would be the same no matter which RA you went with Fees Investment performance Now before we go any further, this might be a good place to explain what exactly an RA is.

A lot of people are under the impression that it is a mystical and complicated beast which only the experts fully understand. But it is actually quite simple. An RA is basically a bucket. And in this bucket you can put investment products or blocks, best savings options in south africa.

These investment blocks are pretty much just like any other investments — Unit Trusts, Cash and the like. The reason they are put into an RA bucket is so that the investment blocks can enjoy the Tax benefits of an RA and can be monitored to ensure that they adhere to the rules of an RA. To really dumb it down, it looks a little something like this. Just a bucket with some blocks in it So as you can see, the product is not maybe as complicated as many would have you believe? And if you signed up for your RA through a financial adviser, you can be sure that they are happily shaving off their cut every month as well.

I think I must distinguish here between financial advisers. There are those that charge you a once off fee. This type is maybe not so bad - you basically pay them once for their time and knowledge. Then there is the other type that will take a cut every month for the entire time you are making contributions to your RA. They charge you month in and month out for what could be 40 years If your RA was initiated through the monthly fee type of financial advisor, your total RA fees will include Bucket fees, Block fees and adviser fees.

Like this: So as you can see there are a few layers of fees involved with an RA. And the lower you can get these fees ideally 0!

I think the reason is best explained by this nice little picture I found on the 10x website: Fees continuously nibble away at your investment, resulting in you having significantly less than what you could have had in the 10x example above, a whole R1. So I think we can agree that it is best to keep your RA fees low, best savings options in south africa. And how do you do that? Well the first easy win would be to cut out the financial adviser especially the monthly fee type adviser since it is certainly not a prerequisite for getting an RA.

Almost all RA providers make it possible to sign up directly with the them these days. Best savings options in south africa the same 10x example best savings options in south africa above that would be around Rk saving. Yes, a D. You are now left with only 2 fees — the fee of the bucket, and the fee of the investment blocks in the bucket. So now it becomes a question of which RA providers give you the lowest bucket and block fee combo? There is no escaping the fact that different investment blocks will perform differently.

Some will give spectacular returns, and some will be epic disasters. No problem though — all you need to do is make sure that you fill your RA bucket with only the best performing blocks. Easy peasy. If only. The problem is that there is no way of telling which blocks will perform the best. Research confirms that past performance is a pretty useless indicator of future performance.

In fact the only thing even slightly correlated to future performance is fees. Investments with lower fees tend to outperform those which charge higher fees — irrelevant of past performance. So the two factors fees and performance in determining the best RA for your money can actually be whittled down to only one — Fees.

And for this reason, in my opinion, fees are the only thing you should consider when choosing your RA. On average, best savings options in south africa, the RA with lowest fees will give the best outcome for the average investor. And then there were To my knowledge, the three options listed below are currently the most competitive RA offerings in South Africa when it comes to bucket fee and block fee combos. So to level the playing field, all fees I mention from here on forward are inclusive of VAT the way it should always be anyways, since that is what you end up paying!

Easy Equities This is the new kid on the block, their product only launched mid-January So total charge for the RA is 1. You can choose best savings options in south africa three investment blocks - High, Medium or Low Equity depending on your risk profile etc.

The really nice thing about the Easy Equities offering is that there are no minimums. If you only have R50 a month - no problem! I like this approach - just one fee to look at. Also worth mentioning is that 1. Larger investment amounts or as your investment grows qualify for reduced fees. You pay 0. Nice incentive to grow your investment though. Also nice or maybe not nice, depends how you look at it is that 10x will automatically move you into more conservative asset classes as you get closer to retirement.

The minimum amount 10X will accept is R per month or a lumpsum of R25 Just as an aside, 10x have been pushing really hard about how important it is to keep your fees low, as it can have a massive impact best savings options in south africa your final investment. Very good point, best savings options in south africa, although I must say for a company that continuously punts minimal fees, it is a little ironic that they are not the cheapest in South Africa… That award instead goes to So there are plenty of blocks to choose from for your RA bucket.

If you do this, then the nice people over at Sygnia will waive their bucket fee. You only pay for the Sygnia investment blocks, and these happen to be pretty cheap at just 0.

You can choose between the Skeleton Balanced 70 which is more aggressive through to the Skeleton Balanced 40 which is more conservative and probably better suited for the last few years before retirement. Dirt cheap, and in my mind that is all that matters. Choosing second and third place is a little more tricky, as the 10x and Easy Equity offerings are very close in terms of cost.

Easy Equities has the no minimums thing going for it which is really fantastic for those who don't have heaps of money but want to get started, best savings options in south africa.

And since for me fees are everything, I think 10x just beats Easy Equities into second place. The nice thing about all three of these RA's is that it is possible to move over to a different provider relatively easily.

So if you want to start an RA but only have a few hundred a month or a small lump sum, then start with Easy Equities, best savings options in south africa, and best savings options in south africa your investment grows large enough you could move it over to whoever is the cheapest at that point.

 

The best 10 Banks & Savings Banks - Africa

 

best savings options in south africa

 

The Best RA In South Africa. So the two factors (fees and performance) in determining the best RA for your money can actually be whittled down to only one – Fees. And for this reason, in my opinion, fees are the only thing you should consider when choosing your RA. On average, the RA with lowest fees will give the best outcome for the average investor. Best savings account South Africa: There are a number of bank savings options with a similar structure. I will repeat that, these and other bank accounts are typical low interest accounts which are ideal to keep savings for short periods of time or emergencies. An example will be a Author: Mbini. Within South Africa, banks offer a range of investment deposit options for customer savings funds including notice deposits, call deposits and fixed deposits. In particular deposit accounts such as fixed deposits which are provided by most South African banks are an investment product where customer funds are illiquid for a specific period of time with a given fixed interest rate of return to compensate.