All you need to know about RSA Retail Savings Bonds

Written by on 12th Nov 2019

Can you imagine investing without having to pay service fees?

RSA Retail Savings Bonds, which are an investment with the Government of South Africa, are offered by the National Treasury. These bonds have no fees whatsoever and earn either inflation-linked interest or a fixed interest rate for the duration of your investment. In November 2019, fixed rates range from 7.25% to 8.25%, based on the timeframe of your investment. Depending on your situation, investments can be made monthly or as a lump sum.

At current rates, a R10000 lump sum investment with interest re-invested, will be worth just under R15000 after five years. Alternatively, investors can get their interest paid to them twice a year.

The fixed interest rate investments are for a fixed term (either two, three or five years) and investors are discouraged from accessing their investment at any time that they choose. Money can be withdrawn 12 months after investing, but a penalty fee will be charged.

One often hears that SA’s youth are big spenders and that they simply aren’t saving nearly as much as what they should be. According to ‘My Credit Check,’ it’s been proven that a majority of the youth winds up in debt even before entering the workspace. Is the term YOLO is being used in its literal sense?

‘Trading Economics’ says that the average household savings rate in South Africa is actually negative at present, meaning that households as a whole have more debt than savings.

RSA Retail Savings Bonds are one way that government is encouraging citizens to start saving, with the bonus of not having to worry about how service fees would eat into their investment returns.

For more details on how to invest: https://secure.rsaretailbonds.gov.za/Details.aspx?MenuId=6&Heading=HOW%20TO%20INVEST

#YMornings spoke to RSA Retail Savings Bond Director Terry Msomi to find out more about this investment and what it means for SA’s youth. Listen here for the full interview:


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