South Africans aren’t saving enough and buckling under the weight of consumer debt of nearly R1,7 trillion. We don’t save for retirement, and blame black tax, Eskom charges, high unemployment, a rising tax burden and inflation – but we must stop living beyond our means and drive a savings culture to break the cycle of intergenerational debt. Interestingly, we are the world leaders for the Google search term ‘how to invest’. World Savings Day on Thursday, 31 October is an opportunity for us to address this serious issue.
Dominique Collett, head of AlphaCode which identifies, partners and grows early-stage financial services ventures comments, “South Africans do not save not only because of debt but due to the widespread lack of financial education. Too many choices and complex products tend to confuse them even more. We have produced a guide to help provide the best solutions to encourage South African’s who are keen to save.”
Take advantage of low-cost investments
Franc is SA’s lowest-cost investment platform. The Franc app was built to make investing simple and affordable by giving members access to the money market and an exchange-traded traded fund with the convenience of their mobile phones.
Franc offers two investment options that the team has selected based on their credibility and low cost. These are the Allan Gray Money Market Fund, which has returned an average of 7.87% interest over the past year, and Satrix 40, voted SA’s favourite ETF.
With no minimum investment amount through Franc, you can withdraw your money anytime without penalty and there are no hidden or complicated fees. Franc charges a simple 1% fee for everything. So for R1 for every R100 you invest, you have access to all Franc’s services, with no other cost at any point. Franc makes investing simple, quick and fun. By doing an easy risk assessment in seconds, Franc will help you to know exactly where to invest your money, based on the goal you set.
Save towards your goals
OUTvest from OUTsurance offers goal-based advice and passive investment via a website and an app combining sophisticated technology and access to financial advisors through the call centre.
Outvest’s offering includes its intuitive do-it-yourself digital front end, low fees and intelligent goal-based calculators – which will guide investors on how much to save to achieve their goals. Clients benefit from both a combination of passive investment strategies and professional human advice.
Grant Locke, head of OUTvest, explains: “Anyone can build and manage their tailored investment plan in minutes online or using the app. We are low cost and use the latest techniques to help everyone make better investment decisions.
Perfect for stokvels
StokFella is inspired by the South African informal savings culture of stokvels, societies and umshayelwano. StokFella makes it easier for stokvels to manage their monthly payments and claims online via a mobile phone or StokFella website. The StokFella Club Account earns more interest when you manage your stokvel book through it. Stokfella offers a compelling mobile phone app that allows peers to collectively set money goals, save, manage, communicate and be more efficient in growing their money.
Earn higher interest rates
South Africans who do save and keep their money at their bank in a transaction account, earn very low interest rates, if any interest at all. According to South African Reserve Bank statistics, about 40% of this money sits in accounts that offer little to no growth.
MyTreasury.co.za is an independent personal finance comparison website, which has helped many South Africans to find comparative saving options online. This website ensures you get the highest interest, based on personal requirements. The easy-to-use comparison tool is free and provides alternatives once you’ve answered a few simple questions. With access to over 600 different rates at 10 financial institutions, their algorithm searches and provides you with the best option. You can specify when you need access to your money ranging from one day to five years and can specify any amounts, with options constantly expanding.
Empower yourself through financial education
“I’ve learned the hard way that earning a salary is actually a great conduit to getting into heaps of debt and not necessarily using it to build wealth,” says Gary Kayle of South Africa’s leading financial education company, Worth. “Financial vulnerability is the biggest cause of over-indebtedness and creates a culture of no savings in South Africa. Financial education is the way to overcome this hurdle.”
Given the state of South Africa’s education system, it’s no surprise that people are not adequately informed of the benefits of savings and investment, or how to go about matters pertaining to financial security and building wealth. “Employers increasingly understand how critical financial wellness is for their employees’ overall health and wellness and Worth is pioneering solutions to address this need. The financial education we offer to corporate employees has shown return-on-investment through a changing employee financial risk score.”
African style investing
Livestock Wealth is a simple method of investing in farming. It presents new investment opportunities for the South African market where you invest your money in agricultural assets as they grow on a farm rather than unit trusts and shares. Through a web and mobile application, potential investors can buy vegetable tunnel gardens, macadamia trees in orchards such as well as cows online from R576. Livestock Wealth has pioneered investment in cows since October 2015 and currently has over 2000 cows at various partner-farms. These are valued at over R40 million and managed as an investment portfolio on behalf of 2000 local and international investors.