The Financial Coach™ - Managing people & their emotions around money » interest rates http://www.thefinancialcoach.co.za Managing people & their emotions around money Mon, 06 Sep 2010 12:59:59 +0000 en hourly 1 http://wordpress.org/?v=3.0.1 Interest (ing)… http://www.thefinancialcoach.co.za/2010/05/21/interest-ing/ http://www.thefinancialcoach.co.za/2010/05/21/interest-ing/#comments Fri, 21 May 2010 09:03:04 +0000 Gregg http://www.thefinancialcoach.co.za/?p=654
  • Best interest rate?
  • RSA Retail Bonds part 2
  • Ignorance is not bliss!
    • ]]>     I heard an advert on the radio last night for Nedbank’s new “Park-it Limited Edition Investment account”…seems that if you give them R10000, they will give you up to 6.25%* interest per annum and after the first 14 days you can have access to your funds with 24 hour notice. There are at least 2 problems with this…
    1. “Up to” 6.25% (turns out you need to invest R1million to get this rate – R10000 gets you 5.75% -  the small print says that the rate will be tiered according to the balance.
    2. You cant access the funds for the first 14 days.
    Now while this may not be a problem to anyone not needing the funds urgenlty, it is certainly a problem to anyone thinking of using this as an emergency fund. To my mind, there are far better options both for emergency fund money and also for those looking for high interest accounts.
    For emergency money you are going to struggle to beat a money market unit trust account – no fees to get in or out, instant access (24 hour notice on most), the best interest rates and most importantly of all, safety! The historic yield on a money market unit trust fund is ±7-7.5% but dont expect this going forward – rates have fallen and it is more likely to be ±6.5% for the next 12 months. (Minimum investment amounts are not as high as the banks would have you believe and there is even a money market unit trust that will take a R1000 debit order.)
    There is also Capitec Bank which is offering an incredible 7% on daily savings accounts – this is an awesome rate and an excellent alternate to the unit trust but only for the first R10000 (the rate falls after that)!
    Longer term investors looking for high interest rates should consider the RSA Retail Bond – this is a government guaranteed bond with 2, 3 or 5 year options. The 2 year option is currently 8.5% and on all of them you are locked in at that rate for at least 1 year – thereafter, if rates have increased you will be able to increase the rate on your bond for the remaining period as well. If rates fall your rate stays fixed! No fees to get in and interest can be paid monthly!
    As a rule, my advice is to stay far away from banks when looking for interest bearing investments – they are there to make as much money from you as they can – there are far better options than the traditional banks!

    Related posts:

    1. Best interest rate?
    2. RSA Retail Bonds part 2
    3. Ignorance is not bliss!

    ]]>     http://www.thefinancialcoach.co.za/2010/05/21/interest-ing/feed/ 2     Best interest rate? http://www.thefinancialcoach.co.za/2009/09/04/best-interest-rate/ http://www.thefinancialcoach.co.za/2009/09/04/best-interest-rate/#comments Fri, 04 Sep 2009 08:43:24 +0000 Gregg http://www.thefinancialcoach.co.za/?p=255
  • Interest (ing)…
  • Talk about a conflict of interest…
  • Provisional tax returns – to submit or not to submit?
    • ]]>     With interest rates having fallen so far and the possibility of still more cuts onimages the horizon, anyone looking for interest income is pretty hamstrung at this stage. Money market rates are 7% per annum and many of the banks are offering “exceptional rates” for 1 year fixed deposits. They will even “enhance” this if you are over 55.

    For anyone who is prepared to be locked in for a while there is an even better option that has been overlooked while short term interest rates have been high and that is the RSA Retail Savings Bond. It is a 2, 3 or 5 year option that is being offered by the SA Government (National Treasury) directly to the public and the interest rates are far better than anything else out there (and there are no fees to get in).  The only “catch” as I can see it is that you are locked in for the period (you can exit after 12 months but there will be an exit penalty). The rates are in the table below but for more information on this go to www.rsaretailbonds.gov.za

    CURRENT INTEREST RATES

    FIXED RATES
    2 Year Fixed Rate 9.25%
    3 Year Fixed Rate 9.50%
    5 Year Fixed Rate 9.75%

    They also have an inflation linked option which is also quite attractive.

    That’s all for now

    Gregg

    Related posts:

    1. Interest (ing)…
    2. Talk about a conflict of interest…
    3. Provisional tax returns – to submit or not to submit?

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