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How to invest money in South Africa (for beginners)

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It’s hard to get rich (or stay rich) without making good investments.

Without investing, inflation eats away at the value of your money. With smart investing, your money becomes even more valuable over time.

That’s the goal: to make money, make money (on its own).

Here’s how you can do it in SA.


How to invest money in South Africa

There are several investment options in South Africa. Each with its own pros and cons. Or risks and rewards. How you invest in one may be different from how you invest in another.

Don’t worry. We’ll cover how to invest in each type in a moment. But first, let’s start by going over the list of ways to invest.


Best investment options in South Africa

  • Tax-free Savings Accounts (TFSA): Ideal for long-term savings, Tax-free Savings Accounts (TFSAs) allow you to invest money without paying tax on the interest, dividends, or capital gains. (It’s backed by SARS.)
  • Fixed Deposits: This option allows investors to secure a fixed interest rate over a specific period. It’s stable and predictable.
  • Interest-bearing Flexible Savings Accounts: These accounts provide the flexibility to deposit and withdraw funds while generating predictable amounts of interest. Because it’s more flexible, the interest is typically less than that of a Fixed Deposit investment.
  • Money Market Funds: A nice conservative option. This option offers short-term flexibility, like Flexible Savings Accounts, but could offer more competitive interest rates. (With a little more risk.)
  • Unit Trusts: These allow investors to pool their money into a diverse portfolio, which is managed by financial professionals.
  • Mutual Funds: Similar to unit trusts, but typically involve a wider array of assets for diversified risk.
  • Exchange Traded Funds (ETFs): These funds track a specific index, commodity, or basket of assets. And are traded on stock exchanges.
  • Stocks: Stocks let anyone buy a piece of a publicly traded company through shares. Investing in company shares can yield high returns but comes with higher risk.
  • Government Bonds: These are secure, government-backed securities. Investors buy bonds according to a fixed agreement and earn predictable interest as a result. Bonds operate like loans between investors and the government. Which, historically, makes it a safe investment.
  • Property: Real estate investments include buying houses, apartments, land, or commercial property. Property investments can provide rental income and potential capital appreciation when the value of the property goes up. (Pro tip: Here’s how you can pay off your home loan faster.)
  • Retirement Annuity (RA): A tax-efficient long-term investment that provides financial security for retirement.


Now you know what you can invest in. Next, we’ll go into how to invest, what to consider, and what popular companies you could use.

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How to invest

Here’s how to begin investing in some of the best investment options available in South Africa.


How to invest in Tax-Free Savings Accounts (TFSA)

How to get started: Decide what type of tax-free investment you want to make. Then, choose a bank, investment firm, or investment app that offers the appropriate option. Banks typically offer tax-free fixed deposits, firms offer a variety of options and funds, and apps offer dedicated accounts.

Things to keep in mind: You can invest up to R36,000 annually with a lifetime cap of R500,000. (At the time of writing. These limits change over time.) And withdrawals still count toward your lifetime limits.

Popular companies/platforms: Major banks such as Standard Bank, Capitec, Absa, FNB, and Nedbank. Investment firms like Coronation, Sygnia, and Allan Grey. Or apps like SATRIX’s investment app or EasyEquities are popular choices for opening a TFSA.


How to invest in Fixed Deposits

How to get started: Begin by comparing the interest rates from different banks and financial institutions. Once you find a good rate, you can set up a fixed deposit account online or by visiting a branch.

Things to keep in mind: Decide how much money you want to deposit and for how long you want to deposit it. Fixed deposits can range from months to years. And longer terms usually mean better interest rates.

Popular companies/platforms: Investec, Capitec, and African Bank are known for offering competitive rates for fixed deposits.


How to invest in interest-bearing Flexible Savings Accounts

How to get started: Open an interest-bearing flexible savings account online or in person. You may already have one. Check to see if your bank offers one. For example, all personal Capitec savings accounts are interest-bearing Flexible Savings Accounts.

Things to keep in mind: You won’t get the highest return on your investment, but the flexibility has its advantages. These accounts are great for short-term savings or emergency funds because you can put in or take out money whenever you need to.

Popular companies/platforms: Capitec and Tymebank are popular choices for these accounts because they offer competitive interest rates even on flexible savings options.

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How to invest in Money Market Funds

How to get started: Choose a reputable fund manager or a bank that provides Money Market Funds (see below.) Then, start investing either directly through them or via a broker. Most investments can be made online and usually require only basic documentation to set up.

Things to keep in mind: Check the fund’s performance history, any associated fees, and the minimum investment amounts, which can start as low as R500, ensuring it fits your financial goals and budget.

Popular companies/platforms: Allan Gray, Coronation, Ninety One, PSG and Sygnia are well-known for their reliable money market funds. Banks like Investec and Nedbank also offer similar products.


How to invest in Unit Trusts

How to get started: Select a reputable financial services provider (see the list below.) Review their track record and choose trusts based on your investment preferences. You can usually start investing online or through financial advisors. Either with a lump sum or monthly contributions.

Things to keep in mind: The fund’s performance history, management fees, minimum investment amounts, and the various trust types.

Popular companies/platforms: Allan Gray, Coronation, Old Mutual, Investec, and Sanlam are well-known providers of unit trusts. 


How to invest in Mutual Funds

How to get started: Assess your risk tolerance and investment goals. You’ll need to choose a fund that matches. Then, choose a Mutual Fund provider (see the list below) and pick a fund. Most funds can be accessed and managed online or through a financial advisor.

Things to keep in mind: Different funds produce different results. Consider your risk tolerance and goals. Pay attention to the fund’s expense ratios and look for options without load fees. This could boost your potential returns.

Popular companies/platforms: Allan Gray, Old Mutual, PSG, and Investec are all prominent managers of mutual funds in South Africa.


How to invest in Exchange Traded Funds (ETFs)

How to get started: Simply open a brokerage account (see the list of companies below), do your research, and choose the ETFs you want to invest in.

Things to keep in mind: Lots of well-known investors like Ray Dahlio believe that ETFs that track ‘the market’ are good to have in your portfolio. ETFs that track the SA Top 40, or America’s S&P 500 for example.

Popular companies/platforms: Satrix, Sygnia, and ETFSA are major ETF providers in South Africa. You can also use investment apps like EasyEquities to invest in ETFs from various providers.


How to invest in Stocks

How to get started: Begin by creating an account on an exchange or by setting up a brokerage account with a firm. (See the list below.)

Things to keep in mind: Stocks can be risky. They tend to go up and down a lot. Make sure you’re investing in companies and industries you’re familiar with. It may be worthwhile practising on a demo account to get the hang of stock investing/trading.

Popular companies/platforms: Local favourites include PSG, AbsaStockbrokers, Standard Bank Online Share Trading, and EasyEquities. You can also use international platforms like eToro. Just keep in mind that you’d need to convert to USD, EUR, or GBP to use international platforms.


How to invest in Government Bonds

How to get started: Register on the National Treasury’s Retail Bonds platform to purchase government bonds directly. You can choose between fixed-rate and inflation-linked options. Otherwise, major banks or brokers may also sell bonds.

Things to keep in mind: Consider whether you want a fixed-rate, inflation-linked, or a mix of each.

Popular companies/platforms: RSA Retail Savings Bonds is the go-to platform in South Africa.


How to invest in Property

How to get started: Do your research. Lightstone reports can help. To make a good investment, you’ll need to identify residential or commercial properties with the potential for appreciation or rental income. Then, you’ll likely have to secure additional financing. (Get a home loan.)

Things to keep in mind: Do you want to invest in a property where you will reside or buy to rent? These factors influence the outcome in a big way. Another thing to remember when doing your maths is the fees. Transfer costs and interest add up quickly.

Popular companies/platforms: Property24 and Private Property are popular property listing websites. And any major bank, SA Home Loans or a platform like Ooba can help you secure the home loan to buy.


How to invest in Retirement Annuities (RAs)

How to get started: Select a reputable financial provider (see the list below) and open a retirement annuity. Decide whether you prefer a fixed or variable annuity based on your financial goals.

Things to keep in mind: Contributions to an RA are tax-deductible. Make sure you understand how RAs work so you can make the most of your investment.

Popular companies/platforms: Liberty Life, Old Mutual, Sanlam, Alex Forbes, and Nedgroup (amongst others) are popular companies to choose from.


In summary

You’ve got lots of options. And there is something for everyone. Or every risk appetite, rather.

Listen to the cliches: Start early, stay informed, and diversify your investments. These principles will help you to balance risk and return. (And make the most with your money.)

Always consider consulting with a financial advisor. They can help tailor your investment strategy to your personal circumstances and financial goals.

If you want to take care of your debt before you start investing. Talk to someone on our team at My Debt Hero. We specialise in helping South Africans with their debt.

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